Finance

If a country’s freely floating currency is undervalued in terms of pur

If a country’s freely floating currency is undervalued in terms of purchasing power parity, its capital account is likely to be A) in deficit or tending toward a deficit. B) in surplus or tending toward a surplus. C) subsidized by the International Monetary Fund. D) a candidate for loans from the World Bank.     […]

Read full post

Date: September 19th, 2020

If people expect that their future purchasing power will decline, what

If people expect that their future purchasing power will decline, what will happen to the exchange rate today? What will be an ideal response?     ANSWER Answer: Typically, when people think that the purchasing power of a money is going to decline in the future, due to higher expected inflation, they try to sell […]

Read full post

Date: September 19th, 2020