Are devaluations of pegged exchange rates totally unexpected?
What will be an ideal response?
While there is a debate about their predictability, some theories suggest that devaluations may be partially predictable. These models argue that growing budget deficits, fast money growth, and rising wages and prices usually precede devaluations. Increases in nominal interest rates typically reflect a combination of the probability and magnitude of a possible devaluation.
You might also like to view...
An accountant's failure to follow the Generally Accepted Auditing Standards (GAASs) when conducting audits constitutes negligence
Indicate whether the statement is true or false
Which of the following statements about cost leadership and the threat of buyers is accurate?
A) If buyers demand increased quality or service, cost leaders can absorb these costs and may still have a cost advantage over the competition. B) Being a cost leader encourages buyer backward vertical integration. C) Firms pursuing a cost-leadership strategy are especially vulnerable to powerful buyers who insist on low prices or higher quality and service from their suppliers. D) Cost leaders are not able to absorb costs associated with buyers' demands for increased quality or service.