A developing country that maintains a fixed value for its currency relative to the US dollar is experiencing a decline in its economic activity, and its inflation rate falls below the level of inflation in the United States. The most likely result of the developing country's actions to maintain the fixed exchange rate target is that its:
foreign exchange reserves will decrease.
short-term interest rates will fall.
money supply will contract.
With a decline in economic activity and domestic inflation, the currency of the developing country would start to rise against the dollar. To protect the exchange rate target, the developing country’s monetary authority will purchase foreign exchange reserves and sell its own currency. This will increase the domestic money supply, decrease short-term interest rates and increase foreign exchange reserves.
inflation的影响好理解，我没理解到为什么decline in economic activity会导致the currency of the developing country would start to rise against the dollar？
多谢多谢！ |
发表于 2015-6-3 05:56
|