We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Microeconomics - Essay Example

Comments (0) Cite this document
Summary
‘Covered Interest Arbitrage is buying a country’s currency spot and selling that country’s currency forward, to make a net profit from the combination of the difference in interest rates between countries and the forward premium on that country’s currency.’ (Pugel,…
Download full paper
GRAB THE BEST PAPER
Microeconomics
Read TextPreview

Extract of sample
Microeconomics

Download file to see previous pages... The exchange rate at which the two currencies will be exchanging in the forward contract at the preset future date is fixed and thus the investor is saved from the risk of adverse exchange rate movements. This method eliminates the downside risk but also puts a cap on the profits that could have been received if the exchange rate moved favourably instead of unfavourably.
The Purchasing Power Parity is an important concept which links prices, exchange rates and inflation. ‘Three versions of PPP have traditionally been used in the literature.’ (Clark, Bartolini, Bayoumi & Symansky, 1994) These versions include the law of one price, absolute PPP and relative PPP. ‘In relative terms, PPP says that exchange rate move in line with the interest rate differential.’ (Rochon & Vernengo, 2001) On the long-term basis, the lower the inflation the more the currency appreciates and the higher the rate of inflation the greater is the magnitude of the currency’s depreciation.
In terms of the of the Ireland and US, the exchange rate went down from $1/€0.70 to $1/€0.65 for the US dollar indicating the depreciation of US dollar in terms of Euro and hence signalling inflation in the US market. On the other side of the picture an appreciation of the Euro signifies low inflation and high growth in the Irish market. In terms of the goods the US dollar could buy € 0.7 worth of goods one year back and now it can afford only € 0.65 for the same dollar. Thus the US dollar depreciated indicating inflation in the US market and showing an appreciation of the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Microeconomics Essay Example | Topics and Well Written Essays - 500 words - 19”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1594755-microeconomics
(Microeconomics Essay Example | Topics and Well Written Essays - 500 Words - 19)
https://studentshare.org/macro-microeconomics/1594755-microeconomics.
“Microeconomics Essay Example | Topics and Well Written Essays - 500 Words - 19”, n.d. https://studentshare.org/macro-microeconomics/1594755-microeconomics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Microeconomics
These constructions have increased the demand for steel in the Chinese economy and China needs to export large amount of iron and iron ore from foreign countries especially from Australia. Though China has a rich reserve of minerals and metals in their own territory but they are still a net importer of iron ore.
5 Pages(1250 words)Essay
Microeconomics
One of the primary elements that new firms face is in the real of advertising. Oftentimes, established firms are able to significantly outspend firms that are wishing to enter the market. This provides the established firms with a significant advantage over newly emergent companies and works to differentiate the products to a significant degree.
3 Pages(750 words)Essay
Microeconomics
A price floor is a legal minimum on the price of a good or service. This essay discusses two outcomes, that are probable when the government entails a price floor, gives comparative research on price floor and equilibrium price and explaines how the minimum wage affects the labor market.
2 Pages(500 words)Essay
Microeconomics
Each question is worth 5 marks and the total mark for this assignment is 10. This assignment is worth 10% of the final grade. 3. The assignment must not exceed 1000 words and must be submitted typed,
2 Pages(500 words)Essay
Microeconomics
It then allocates the resources available in the society to many potential uses. It also seeks to understand how national economic policies affect these households and firms. According to Tietenberg (2006), microeconomic issues regarding the environment come in
4 Pages(1000 words)Essay
Microeconomics
This is just a simple explanation of these two economic principles because, in reality, it is a lot more complicated than that. Microeconomics is to do with the market’s
2 Pages(500 words)Essay
Microeconomics
In the year 2010, the US current account deficit stood at $470 billion compared $ 804 billion recorded in 2006 (Bergsten, 2011). The 2010 deficit constituted about 3% of the $ 14.7 trillion recorded the same year. According to the current global economic situation, the
1 Pages(250 words)Essay
Microeconomics
In a special manner, microeconomics dwells on behaviors related to demand and supply and determining prices and output in certain markets. On a broader perspective, microeconomics addresses smaller issues, putting much
5 Pages(1250 words)Essay
Microeconomics
The third approach is the last dollar rule, whereby the firm should produce at a point where the last dollar it spends on an input
3 Pages(750 words)Essay
Microeconomics
Market failure may occur when there is a negative externality that imposes an external cost on the society. The efficient level of coal gas mining for the society is lower than the market quantity. In effect, the
6 Pages(1500 words)Essay
Let us find you another Essay on topic Microeconomics for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us