Assume that a country has pegged the value of its currency to another countrys currency and that

Question:

Assume that a country has pegged the value of its currency to another country’s currency and that the anchor country increases its interest rate. Describe the effects on the following:

a) The export sector of the pegging country

b) Households’ net worth if the pegging country is forced to devalue its currency and most debts are denominated in the foreign (anchor) currency

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Macroeconomics Policy And Practice

ISBN: 978-0133424317

2nd Edition

Authors: Frederic Mishkin

See More Books

Question Posted: Feb 20, 2024 04:00 AM

See More Questions

Gold has served as a medium of exchange and a store of value. The increase in trade led each country to set a par value for its currency in terms of gold. The gold standard as an international...
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
For years, there have been claims from politicians in the United States that the Chinese actively manipulate their currency, the yuan, keeping its value low against the dollar and other major...
Use the figure to make the lists in Exercises 8586. List the slopes m 1 , m 2 , m 3 , and m 4 in order of decreasing size. y y = mx + b y = mx + b X - y = m3x + b3 y = m4x + b4
Solve the system of linear equations and check any solutions algebraically. 1. 2. [5 12 + 7z %3D 16 + 7z 7y + 4z (3 E 9 (2r + 5y 19z = 34 19 %3D \ 3 + 8y 31z %3D 54
Following are the individual finoncial statements for Gibson and Dovis for the year ending December 3 1 , 2 0 2 4 : Gibson scquired 6 0 percent of Davis on April 1 , 2 0 2 4 , for $ 6 2 2 , 0 5 0 ....
5. The chief financial officer of PartsCo has asked you to rerun the forecast of the companys income statement and balance sheet at a growth rate of 3 percent. If the company generates more cash than...
Assume eat, Inc., is expanding into Norway. The company must decide where to locate and how to finance the expansion. Identify the financial statement where these decision makers can find the...
Sunland Company has recorded the following items in its financial records. Cash in bank $54,700 Cash in plant expansion fund 111,000 Cash on hand 14,500 Highly liquid investments 38,500 Petty cash...
Go to the St. Louis Federal Reserve FRED database, and find data on daily dollar exchange rates for the euro (DEXUSEU), British pound (DEXUSUK), Japanese yen (DEXJPUS), Chinese yuan (DEXCHUS), and...
Explain why a central bank might want to intervene in the foreign exchange market to prevent an excessive appreciation of its currency, even if it previously stated that it would allow its currency...
A professor has recorded exam grades For 20 students in his class, but one of the grades is no longer readable. If the mean score on the exam was 82 and the mean of the 19 readable scores is 84, what...
What are knowledge or innovation workers? What are the key elements of professional practice, work environment and work design needed to support the productivity and creativity of knowledge or...
What problem does this concept solve or what pain does it alleviate and how compelling is the problem? 2. Who is your specific target customer? 3. How do they currently meet this need for themselves...
Consider a person standing in a room where the average wall temperature is 20 C. This person is trying to reach the "thermal comfort" by adjusting the A/C air temperature. Find out the appropriate...
If WHO, the World Health Organization,defines health as a state of completephysical, mental and social well-being and not merely the absenceof disease and infirmity (WHO, 2011)and wellness is...
As a manager, you want to find a way to motivate Nate and increase his engagement and job satisfaction in the workplace. Drawing upon a behavioral theory of motivation, discuss how you, as a manager,...
When 23.6 g of calcium chloride, CaCl2, was dissolved in water in a calorimeter, the temperature rose from 25.0oC to 38.7oC. If the heat capacity of the solution and the calorimeter is 1258 J/oC,...
A business had revenues of $280,000 and operating expenses of $315,000. Did the business (a) Incur a net loss (b) Realize net income?
Consider the Security Market Line (SML). What determines its vertical intercept? What determines its slope? And what will happen to an assets price if it initially plots onto a point above the SML?
Suppose that the Federal Reserve wants to increase stock prices. What should it do to interest rates?
Suppose that the Federal Reserve wants to increase stock prices. What should it do to interest rates?
A stock is expected to pay a dividend of $1.50 at the end of the year (i.e., D 1 = $1.50), and it should continue to grow at a constant rate of 10% a year. If its required return is 14%, what is the...
The Hobby Shop has a checking account with a ledger balance of $1,700. The firm has $2,400 in uncollected deposits and $4,200 in outstanding checks. What is the amount of the disbursement float on...
An investment will pay you $34,000 in 11 years. If the appropriate discount rate is 6.1 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate...

Assume that a country has pegged the value of its currency to another countrys currency and that

Question:

Step by Step Answer:

Effects of Anchor Countrys Interest Rate Increase on a Pegged Currency a The export sector of the pegging country When the anchor country increases it...View the full answer

Macroeconomics Policy And Practice

Students also viewed these Business questions