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Assignment on Economics Sample

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Added on  2021-04-21

Assignment on Economics Sample

   Added on 2021-04-21

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Running head: ECONOMICS ASSIGNMENT Economics AssignmentName of the StudentName of the UniversityAuthor Note
Assignment on Economics Sample_1
1ECONOMICS ASSIGNMENT Table of ContentsAnswer a:.........................................................................................................................................2Answer b:.........................................................................................................................................5Answer c:.........................................................................................................................................7Answer d:.........................................................................................................................................8Answer e:.........................................................................................................................................9
Assignment on Economics Sample_2
2ECONOMICS ASSIGNMENT Answer a:The foreign exchange of a country refers to the valuation of the domestic currency of theconcerned country in terms of countries of other countries. Over the years, different forms ofsystems and measurements have been developed in the global scenario for the purpose ofdetermination of the valuation of the domestic currency of countries and the foreign exchangerates of the same (Chinn 2012). For example, there exit different systems including fixed,flexible as well as managed float ones for the purpose of determination of exchange rates indifferent countries, thereby making actual exchange rate determination a complex procedure.With globalization and the increasing integration of the economies in the international scenario,determination of exchange rates of different countries has become a vital necessity forestablishing economic and industrial relations among the countries as well as for determining theeconomic and commercial prospects of the countries across the world (Noussair, Plott andRiezman 2013).One of the most simple and comprehensive method of determining the exchange rate ofthe currency of a country is by using the demand supply framework, existing as one of the keyconceptual frameworks in the domain of economics. Under this framework, the demand for aparticular currency in international market and the supply of the same from the concernedcountry are compared in setting the value of the domestic currency in concern (Frenkel andJohnson 2013). The demand and supply framework of exchange rate determination helps themonetary authorities also to determine the future traits and dynamics of the exchange rates of thecurrency depending upon the market activities. Under this framework, the various factorsaffecting the dynamics in the value of the domestic currencies and their changes over time can
Assignment on Economics Sample_3
3ECONOMICS ASSIGNMENT AUD/USDSD1D0D2QQ2Q0Q1E1E2E0X0X1X2also be taken into consideration, which in turn helps the monetary authorities to analyse andaddress any discrepancy in the same (Gabaix and Maggiori 2015).Keeping this into consideration, the concerned section emphasizes on the economy ofAustralia and tries to analyse the way in which the exchange rate of the domestic currency of thecountry, Australian Dollar (AUD), is determined in the international Foreign exchange market(MacDonald and Stein 2012). This can be explained with the help of the following figure, whichshows the dynamics in the demand and supply of currencies in the international foreign exchangemarket:Figure 1: Determination of exchange rate by demand supply model(Source: As created by the author)In the international market for foreign exchange, the demand for currency of a country isdetermined by the international export demand for the goods and services produced in thecountry whose currency is evaluated. On the other hand, the supply of the domestic currency of
Assignment on Economics Sample_4

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