ch. 14 Flashcards
(12 cards)
What is the definition of exchange rate?
What do we mean by appreciation of a currency? What is the appreciation rate?
What is the effect of depreciation on CA? What about of foreign assets/debt?
What are the actors in the foreign exchange market?
Why is the exchange market so liquid? what is the role of the dollar?
How can we define the equilibrium in the foreign exchange market?
How does a change in E affect the return on I in foeign currency?
how is the return effected by dep/app of domestic currency? What role play expectations?
write and rapresent the interest parity condition. explain what happen when there is no equilibrium
What is the effect of shcoks? Rx, Ry, Ee
Why do we assume E adjust and not R?
Why IP does not often corrispond to reality?
