How can we determine fixed exchange rate, Macroeconomics

Assignment Help:

How can we determine fixed exchange rate

If a nation has a fixed exchange rate (say against a specific currency), the government or central bank may change this fixed exchange rate. Assume that Hong Kong is our home country and that Hong Kong dollar (HKD) is fixed against USD at the exchange rate 7.8 HKD/USD (direct notation). If central bank in Hong Kong changes this exchange rate to say 8.2 HKD/USD it makes foreign currency more costly and HKD cheaper. In this case we say that HKD has been devalued. Though, if exchange rate is changed to say 8.6 HKD/USD we say that HKD has been revalued.

1988_The euro against the US dollar.png

As an example, Figure above illustrates the exchange rate between USD and euro with the euro as the base currency.

 

 


Related Discussions:- How can we determine fixed exchange rate

Firm‘s lowest average cost, If the firm‘s lowest average cost is $52 and th...

If the firm‘s lowest average cost is $52 and the corresponding average variable cost is $26, what does it pay a perfectly competitive firm to do if • The market price is $51?

Proctor and gamble, Bayer Schering Pharma AG, Germany owns the Alka-Seltzer...

Bayer Schering Pharma AG, Germany owns the Alka-Seltzer, which was launched in 1931 and was meant for relief of minor aches, pains, inflammation, fever, headache, heartburn, sour s

Invest into an account, You have 300 right now. You invest into an account ...

You have 300 right now. You invest into an account and 12 years later your investment will be 8 times of the initial investment. What the investment rate if a) The bank pays sim

Example of a party who lacks competence, The law requires that the parties ...

The law requires that the parties be competent to enter into a contract. Give an example of a party who lacks competence.

Quantity theory of money, what is the importance of the quantity theory of ...

what is the importance of the quantity theory of money

Equilibrium quantity price and quantity, Over the past few years there has ...

Over the past few years there has been much concern about falling housing prices, and some policy makers have argued that the government should put a floor under prices so that the

Fiscal, what is the supply side

what is the supply side

Fixed versus floating exchange rates, Fixed versus floating exchange rates:...

Fixed versus floating exchange rates: To begin with, we will briefly review the balance of payments (BOP) table of a nation that you studied in the course on international eco

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd