Commerce Exam > Commerce Questions > Given the expected future exchange rate and t...
Start Learning for Free
Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.
- a)True
- b)False
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Given the expected future exchange rate and the foreign interest rate,...
- The Interest Parity Relation suggests that given the expected future exchange rate and the foreign interest rate, an increase in domestic interest rate should increase the exhange rate leading to an appreciation. When domestic interest rates increases, it makes domestic financial assets relatively more profitable. Investors who would like to hold more domestic assets demand domestic currency leading to an appreciation.
Most Upvoted Answer
Given the expected future exchange rate and the foreign interest rate,...
The Great Depression: A Catalyst for Macroeconomics
The Great Depression, which began in 1929 and lasted through the late 1930s, was a profound economic crisis that fundamentally reshaped the field of economics, particularly macroeconomics.
Economic Collapse
- The stock market crash of 1929 led to a drastic decline in consumer spending and investment.
- Unemployment soared to around 25%, and GDP plummeted, causing widespread poverty and hardship.
The Need for New Economic Theories
- Existing economic theories, primarily based on classical economics, struggled to explain the prolonged downturn.
- Economists recognized the limitations of previous approaches, which did not adequately account for aggregate demand and its role in economic performance.
Key Contributions to Macroeconomics
- John Maynard Keynes emerged as a pivotal figure, advocating for government intervention through fiscal policy to stimulate demand.
- His ideas were encapsulated in "The General Theory of Employment, Interest, and Money," which shifted focus from individual markets to the economy as a whole.
Long-Term Impact
- The Great Depression laid the groundwork for modern macroeconomic theory and policy-making.
- It led to the establishment of macroeconomics as a distinct discipline, focusing on total economic output, employment levels, and inflation.
In summary, the Great Depression not only illustrated the failures of classical economic thought but also prompted the development of new theories and approaches that continue to influence economic policy today. This crisis highlighted the importance of understanding the economy in its entirety, solidifying macroeconomics as a critical field of study in commerce.
The Great Depression, which began in 1929 and lasted through the late 1930s, was a profound economic crisis that fundamentally reshaped the field of economics, particularly macroeconomics.
Economic Collapse
- The stock market crash of 1929 led to a drastic decline in consumer spending and investment.
- Unemployment soared to around 25%, and GDP plummeted, causing widespread poverty and hardship.
The Need for New Economic Theories
- Existing economic theories, primarily based on classical economics, struggled to explain the prolonged downturn.
- Economists recognized the limitations of previous approaches, which did not adequately account for aggregate demand and its role in economic performance.
Key Contributions to Macroeconomics
- John Maynard Keynes emerged as a pivotal figure, advocating for government intervention through fiscal policy to stimulate demand.
- His ideas were encapsulated in "The General Theory of Employment, Interest, and Money," which shifted focus from individual markets to the economy as a whole.
Long-Term Impact
- The Great Depression laid the groundwork for modern macroeconomic theory and policy-making.
- It led to the establishment of macroeconomics as a distinct discipline, focusing on total economic output, employment levels, and inflation.
In summary, the Great Depression not only illustrated the failures of classical economic thought but also prompted the development of new theories and approaches that continue to influence economic policy today. This crisis highlighted the importance of understanding the economy in its entirety, solidifying macroeconomics as a critical field of study in commerce.
|
Explore Courses for Commerce exam
|
|
Top Courses for CommerceView all
Question Description
Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer?.
Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer?.
Solutions for Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Given the expected future exchange rate and the foreign interest rate, an increase in the domestic interest rate leads to an increase in the exchange rate.a)Trueb)FalseCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup