3. Explicate how the exchange rates, in a flexible exchange rate
regime, and the balance of payments, in a fixed exchange rate
world, are affected by deficits and surpluses.
Obtain the most current Balance of Payments (BOP) of Singapore
and briefly discuss surpluses or deficits on major accounts. What
is the total amount of foreign reserve of this country? Please
attach the BOP to your project and highlight all the potential
numbers. Thank you!
1. Explicate the monetary approach to exchange rate
determination.
2. Discuss the current account/balance of payments view to ER
determination
3.Explain the portfolio balance approach to ER
determination.
"For countries with fixed exchange rates, payments deficits
would be self-correcting, if only governments would stop doing
their darnedest to prevent correction." Comment, and include how
counterbalancing monetary policy (sterilization) can prevent
self-adjustment from occurring.
Under fixed exchange rates, excessive monetary growth
leads to balance of payments problems.
Under floating exchange rates, it leads to a currency
problem.
Discuss these statements with
reference to the monetary approach to the balance of
payments.
Question:
Explicate the key reason that the US has been running deficits
for the last close to 40 years, and presently, is the largest debt
nation globally. The US net international Investment position is
approximately $ 12 trillion.