1)
Using the quantitive figures from last class,
explain and illustrate what you would expect to happen to the exchange rate as
a result of the international trade that has taken place in 2011
For country x the currency depreciates because
they are importing more than they are exporting meaning
2)
Explain the relevance of the reserve asset funding
to the balance of payments.
They are going to sell reserves to balance
their payments
3)
Explain the concept of current transfers
Also called the invisible trade balance, service balance or net
services.
•
It is a measure of the
revenue received from the exports of services, minus, the expenditure on the
imports of services over a given time period.
•
Examples: banking, insurance,
tourism
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