Expound on the balance of payments/current account view of exchange rates.
Expound on the balance of payments/current account view of exchange rates.
Homework Answers
The Balance of payment is also known as balance of International Payments of country is the records of all economic transactions between the home country and the rest of the world for a particular period. The Balance of payment considers all external transactions of country. It is also an important aspect specially in international trade. BOP provides details information about demand and supply of country currency.
Exchange Rate refer to rate at which home country can exchange their currency with other country. Exchange rate can be Fixed or Flexible/Floating.
Fixed Exchange rate can be determined by central authority of country while on other hand flexible exchange rate can be determined by demand and supply of Foreign currency in international market.
A change in country balance of payment can cause of fluctuation in exchange rate between home currency and foreign currency. BOP does not impact exchange rate when exchange rate is fixed rate, because fixed rates are controlled by central banks and they adjust the flow of currency to offset with International funds. (i.e Hedging)
In other words country BOP can cause fluctuation in exchange rate can only exist under floating exchange exchange rate.
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Expound on the balance of payments/current account view of
exchange rates.
Vilasram Deshmukh is forecasting JPY/USD exchange rates based on balance of payments analysis. He notes that...
Vilasram Deshmukh is forecasting JPY/USD exchange rates based on balance of payments analysis. He notes that the United States is running large current account deficits relative to Japan. Based on this information, he concludes that the JPY/USD rate should decrease. His conclusion is most likely supported by which one of the following reasons. Please provide explanation to justify your answer. A. flow mechanism of the current account influences. B. portfolio composition mechanism of the current account influences. C. capital account...
The official settlements balance or balance of payments is the sum of A. the current account...
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Question 31 (2.5 points) The balance of payments equals The current account balance plus the trade...
Question 31 (2.5 points) The balance of payments equals The current account balance plus the trade balance The current account balance plus the financial and capital account balance The current account balance plus the financial account balance O equals the trade balance. Question 32 (2.5 points) A crisis is the second state in the regulatory process the first stage in the regulatory process none of the answers are correct the third stage in the regulatory process
Describe economic change in Russia and China since 2000. Pay attention to the current account balance...
Describe economic change in Russia and China since 2000. Pay attention to the current account balance and exchange rates. Has exchange moved in the right direction given the current account ?
Explain the difference between a trade deficit, a current account deficit, and a balance of payments...
Explain the difference between a trade deficit, a current account deficit, and a balance of payments deficit. Explain fully why a current account deficit can be good for a country.
In the table given below, Singapore’s balance of payments (BoP) comprises: (a) Current account of goods,...
In the table given below, Singapore’s balance of payments (BoP)
comprises:
(a) Current account of goods, services & factor income (primary
& secondary income balance)
(b) Capital & Financial account as DFI & Portfolio
Investment
(c) Errors & Omissions
(d) A+B+C = BoP reflected in E
(e) Reserve Assets
(f) Official reserves (stock as accumulated over the years)
Explain the balance of payments position of Singapore and why
traditionally, its trade in services rather than trade in goods
dominated its...
Which of the following statements regarding the balance of payments account are correct, ceteris paribus? Select...
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Explain the output and balance of payment effects of an import tariff under fixed exchange rates....
Explain the output and balance of payment effects of an import tariff under fixed exchange rates. What would happen if all countries in the world simultaneously tried to improve employment and balance of payments by imposing tariffs?
Suppose that a certain country has a current account surplus in its balance of payments. Does...
Suppose that a certain country has a current account surplus in its balance of payments. Does this mean that the country will necessarily have a financial account deficit? Explain why or why not.
estion 10 Government-to-government unilateral transfers are recorded in the current account of the balance of payments...
estion 10 Government-to-government unilateral transfers are recorded in the current account of the balance of payments of a nation. True False uestion 8 Income earned from foreign investments is recorded in the official settlement account of the balance of payments of a nation. True False uestion 7 The Official Settlement account of a balance of payment includes which of the following transactions? a. Exports of goods and services b. Foreign investment flows c. Income derived from foreign investments d. All...
Question 31 (2.5 points) The balance of payments equals The current account balance plus the trade balance The current account balance plus the financial and capital account balance The current account balance plus the financial account balance O equals the trade balance. Question 32 (2.5 points) A crisis is the second state in the regulatory process the first stage in the regulatory process none of the answers are correct the third stage in the regulatory process
In the table given below, Singapore’s balance of payments (BoP)
comprises:
(a) Current account of goods, services & factor income (primary
& secondary income balance)
(b) Capital & Financial account as DFI & Portfolio
Investment
(c) Errors & Omissions
(d) A+B+C = BoP reflected in E
(e) Reserve Assets
(f) Official reserves (stock as accumulated over the years)
Explain the balance of payments position of Singapore and why
traditionally, its trade in services rather than trade in goods
dominated its...
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