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Determination of Exchange Rate
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6.2.1, 6.2.2 floating exchange rate system.

Mohini Jain
Gold medalist in Economics and graduate from St. Francis. Loves to read novels.

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U
Unacademy user
Pls make for probability and other topics also surabhi easily to understand
In point <b> interest rate and exchange rate<\b> people will save money if int. rate is greater, country will have more money and the currency will appreciate however in point <b>exchange rate in Long run <\b>you are saying if there is inflation there will be more money and hence currency will depriciate please explain.
Mohini Jain
10 months ago
Both points are correct.. First one is in terms of short period.. Interest rate high... More saving... More investment... More money... Value of rupee goes up... Second situation.. Long term exchange rate... If you have inflation... That means too much of rupees... So obviously the value of rupee will go down.. Hence fall in values of rupee...
Could you please explain last slide with another example "DI>FI" ?