Notesale: Turn your study into money

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Running head: ECONOMICS

ECONOMICS

Institutional Affiliation
Student’s Name
Date

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ECONOMICS

Currency pair between the USD and the Euro shows the number of US dollars (the quote
currency) required to buy one Euro (Base currency)
...
It is only between 2002 and 2008 that the Euro
recorded some positive gain against the Dollar (The economist, 2018)
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A Big Mac expenses

£3
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51 in USA
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58
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75, implies the British pound is undervalued by 23
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The main reasons as to why the Euro has been on the decline is because: there have been higher
growth rate of money within the EU, there have been increased growth of per capita income,
Higher growth rate of population, increased capital accumulation and growth of index of stocks
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Because of this, investors tend to find the
US market to be more attractive when it comes to making investment
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Despite the poor performance of the Euro against the Dollar, economist are hopeful that the Euro
may catch up with the Dollar in the long run as shown below (Debnath, A
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ECONOMICS

Reference
Debnath, A
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Knocked-Down Euro May Yet Deliver a Comeback Hook Against Dollar
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bloomberg
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(2018)
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Retrieved from The economist:
https://www
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com/news/2018/07/11/the-big-mac-index
Q2
a) “YUAN”, the Chinese currency was undervalued since China had a massive trade surplus
plus its present account surplus increased sharply within the past few years (The
economist, 2018)
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The Chinese government has sustained this
position, which is against any attempts to make the YUAN appreciate
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They are able to purchase and a
lot of US currency owing to the huge trade surplus with USA, and they purchase US
currency roughly the same as this surplus
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This
implies that it must command a huge surplus, but as things stand, India is a deficit nation
(Economic Time, 2018)
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The counter argument is that a nation that has a balanced budget and a
surplus of domestic saving when compared to domestic saving, or a nation, which
produces a lot when compared to what it consumes, should have a current surplus,
regardless of the exchange rate
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References
economist, T
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The Big Mac index
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economist
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(2018)
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Retrieved from Economic Market:
https://economictimes
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com/markets/forex/rupee-slumps-to-all-timelow/articleshow/64787702

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