Exchange rates and balance of payments: US and France
1) Explain how each of the following will affect the
relative values of the dollar and the French franc:
-Income growth higher in the United States than in France.
-Inflation higher in France than in the United States.
-A real interest rate higher in the United States than in
France.
2) What are the three categories of transactions in the
balance of payments? Give an example of each.
Categories: