Explain whether you agree or disagree with each of the following statements.
a) A nation's currency will depreciate if its inflation rate is less than that of its trading partners.
b) A nation whose interest rate falls more rapidly than that of other nations can expect the exchange value of its currency to depreciate.
c) A nation that experiences higher growth rates in productivity than its trading partners can expect the exchange value of its currency to appreciate.© BrainMass Inc. brainmass.com October 17, 2018, 12:34 am ad1c9bdddf
a) A nation's currency will depreciate if its inflation rate is less than that of its trading partners. AGREE.
There is something that is missing here. There is no mention of interest rates in the two countries, and therefore, the explanation here is based on the assumption that we are only looking at the transaction demand for the two currencies. If that is the case, then lower inflation rate in the home country will mean that, ceteris paribus, the demand for the local currency will fall relative to the demand for ...
This solution examines local currency.
Labeling & National Currencies
Please help I need details, the more information the better.
1) A garment manufacturer produces sports apparel at its facility in the Merianas Island in order to take advantage of lower labor cost. Can these garments labeled "Made in USA"? Why or Why not ?
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5) The Euro replaced 12 national currencies. What are the resulting advantages and savings for the EU members?View Full Posting Details