What are the changes in the exchange rate, Macroeconomics

Assignment Help:

What are the Changes in the exchange rate

Assume that United States is our home country and that current euro exchange rate in direct notation is SD= 1.5 (euro/USD). In indirect notation, SI= 0.667 (USD/euro). If euro becomes more expensive in terms of USD we say that USD has depreciated against euro (lost in value). This means that SD has increased (to say SD= 1.6) and that SI has fallen (to 0.625). If euro becomes less expensive we would say that USD has appreciated against the euro. In such a case, SD would fall and SI would increase. Of course, when USD depreciates against euro, the euro appreciates against the USD.

Remember:

A foreign currency is more expensive Û the domestic currency has depreciated

A foreign currency is less expensive Û the domestic currency has appreciated

 


Related Discussions:- What are the changes in the exchange rate

Government can finance its budget deficit, A government can finance its bud...

A government can finance its budget deficit by doing all of the following except: A. borrowing from its central bank. B. printing money. C. selling bonds. D. buying bonds.

the effect of on reserves and the monetary base, Many developing countries...

Many developing countries have suffered banking crises in which depositors lost part or all of their deposits (in some countries there is no deposit insurance). This type of crisis

Monetary policy vs. fiscal policy, Monetary Policy Vs. Fiscal Policy Ac...

Monetary Policy Vs. Fiscal Policy According to monetarists, money is very important in determining the level of aggregate demand and that monetary policy is very potent. In con

Four different measures of GDP, Four different measures of GDP Using ci...

Four different measures of GDP Using circular flow model we see that there are 4 equivalent ways of measuring GDP:  Using the definition: market value of all finished goo

Explain the determinants of transaction demand, Macro Economics 1. How...

Macro Economics 1. How was the Classical Theory of interest role criticized by Keynes? 2. Illustrate the barter system that was used in early times in lieu of money. 3.

MPC, A change in government purchases of goods and services results in a ch...

A change in government purchases of goods and services results in a change in real GDP equal to $200 million. Assume the absence of taxes, international trade, and changes in the a

Elucidate the rise in gdp, How much does GDP rise in each of the following ...

How much does GDP rise in each of the following scenarios: 1. During a recession, the government raises unemploymemnt benefits by $100 million. 2. A new US airline purchases

Commercial transactions in blood from the egoistic, Examine the pros and co...

Examine the pros and cons of commercial transactions in blood from the egoistic, the utilitarian, and the Kantian perspectives.

Sales tax on restaurant food, If you were a restaurant owner and you knew t...

If you were a restaurant owner and you knew that the demand for your restaurant was elastic, how would you feel about a sales tax on restaurant food? Explain.

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