When a country’s currency depreciates against the currencies of its major trade partners, its trade balance...

When a country’s currency depreciates against the currencies of its major trade partners, its trade balance often worsens in the short run before it starts to improve. This leads to a J curve in the trade balance. Illustrate the J curve graphically. Explain why the J curve happens

Expert Solution

jeff jeffy answered 1 year ago

Suppose the USD depreciates by 10% against the bucket of world major currencies in the next...

Suppose the USD depreciates by 10% against the bucket of world major currencies in the next year. What are the pros and cons of this for the US balance of payments?

When the currency denominating an international bond depreciates against the domestic currency of the investor, the...

When the currency denominating an international bond depreciates against the domestic currency of the investor, the value of that bond to the investor ______(rises OR Falls) . The risk of this occurrence is known as ________ ( liquidity, interest rate, exchange rate, OR credit) risk. 2- assume a direct quotation of $0.80 per euro. Suppose you have also been given a direct quotation of $0.1 per peso. The cross exchange rate, indicating the euro value in terms of pesos, is _______euros...

116. An increase in a country’s trade barriers will cause the _____ for its currency to...

116. An increase in a country’s trade barriers will cause the _____ for its currency to shift to the _____. a. demand, left b. demand, right c. supply, left d. supply, right e. supply and demand, left 119. The advantage of having a weak currency is it: a. stimulates the demand for exports. b. make imports more expensive. c. makes currency trading more profitable. d. All of the above. e. None of the above. 120. If the foreign interest rate...

When a country depreciates its currency then _ in the short run. A.)imports will decrease and...

When a country depreciates its currency then _ in the short run. A.)imports will decrease and exports will decrease. B.) imports will increase and exports will increase. C.) imports will decrease and exports will increase. D.) exports will increase but imports will not be affected.

21. If a small country fixes its exchange rate against a large country’s currency, and the...

21. If a small country fixes its exchange rate against a large country’s currency, and the small country initially has a higher inflation rate than the large country, the two inflation rates will be equalized because A. the higher inflation in the small country appreciates its real exchange rate, reducing net exports and output, and reducing the inflation rate to the same rate as in the large country. B. the higher inflation in the small country depreciates its real exchange...

what are the major trade currencies and what is their relative proportion in global trade?

a. The Australian dollar against the US dollar (and against other major currencies) has appreciated in...

a. The Australian dollar against the US dollar (and against other major currencies) has appreciated in recent months (mid-March 2020 to early June 2020). Identify the underlying drivers and the implications of this rising exchange rate in Australia.

When a home currency depreciates, which one of the following is NOT correct? Select one: a....

When a home currency depreciates, which one of the following is NOT correct? Select one: a. home exporters have more advantages than home importers b. home importers have more advantages since it takes more home currency to buy the foreign currency c. a foreign currency is more valuable than the home currency d. the home currency has less purchasing power in the world trade markets

“Recently, the country signs a free-trade agreement (FTA) with its major trading partners. In the newly...

“Recently, the country signs a free-trade agreement (FTA) with its major trading partners. In the newly signed FTA the country agrees to reduce import tariffs on its trading partners’ dairy products. This could deteriorate the country’s current balance.” True/False/Uncertain, explain and support your answer by ONE DD-AA diagram (only the first diagram will be graded). Note: You can assume the country’s current account is in balanced in the initially equilibrium and the signing of the FTA has a long-last effect...

According the monetary approach, in the long run, a currency depreciates when the country's interest rate...

According the monetary approach, in the long run, a currency depreciates when the country's interest rate rises relative to another country's interest rate. Explain.

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