Questions tagged [exchange]

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1answer
36 views

If the BOP is always equal to 0 then why would a trade imbalance cause currencies to fluctuate?

I am a bit confused in interpreting the correlation between a trade deficit/surplus & currency depreciation/appreciation. Considering BOP always equals 0 and a outflow in the current account is ...
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0answers
25 views

Price setting for a pure exchange economy, with two goods and two agents, with possible different utility functions that depends on total consumption

Consider a pure exchange economy comprised of two agents with differentiable utility functions that are strictly increasing and strictly concave. There are only two goods in this economy (x,y) and ...
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1answer
57 views

Is there an alternative to currency to facilitate exchange of goods and services?

Say I have collected a bunch of seashells. Tom wants to have my seashells. Therefore the seashells have value and I have just created wealth. And so Tom buys my seashells for \$10. But even though I ...
3
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2answers
498 views

Is there any pressure to keep currency exchange rates around 1?

I notice that for any pair of currencies, the exchange rates seem to stay around 1 (as opposed to, say, 1,000,000). This is no longer the case if one country experiences an economic crisis that ...
3
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1answer
73 views

Can stock exchange workers go on strike?

Today, trade in the stock exchange of my country Israel (TASE) was cancelled due to a union dispute. So clearly, in Israel the answer to the question in the title is "yes". I can't say this comes as a ...
1
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1answer
27 views

How did the Exchange Rate Mechanism work?

The Exchange Rate Mechanism was introduced by the European Economic Community in 1979. It fixes the Exchange rates between currencies to a specific margin. But how does it do this?
2
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1answer
280 views

How to calculate the intercept of an indifference curve in an Edgeworth box?

Consider an exchange economy with two goods (Good 1 and 2) and two individuals ($A$ and $B$): $A$'s utility function is $u_A(x_{A_1}, x_{A_2}) = 2x_{A_1} + 5x_{A_2}$ $B$'s utility function is $u_B(...
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1answer
225 views

Empty edgeworth box [closed]

Can a empty edgeworth box be a pareto set? What kind of economy would be describe in this situation?
4
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2answers
152 views

How is sending money out of a country draining its economy?

From this article: Every year, Mexicans working in the U.S. send at least $20 billion back to Mexico in the form of remittances, placing a huge drain on our economy. But I don't see what negative ...
1
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0answers
218 views

REER ULC vs. REER PPP

Can someone give an example and an exponation of how a currency may be undervalued when considering its REER (real exchange rate) in PPP terms, but overvalued when looking at the REER based on ULC (...