The following paragraphs discuss the impact of various economic events on the exchange rate. Complete the paragraphs by filling in the blanks. Use any of the words from the following list (you can use each of these words as many times as you wish but choose carefully - your sentence must make grammatical sense):demand supply left right buy sell imports exports rise fall increases decreases What happens to the current account balance and the exchange rate when the following happens? Suppose that New Zealand firms become more profitable relative to foreign firms and so increase their payment of dividends (everything else held constant). The value for net foreign income therefore ________ and the value of the current account balance will _______. Payment of NZ dividends to foreign owners affects the _______ or/of $NZ while payments of foreign dividends to NZ owners of foreign companies affects the _______ for/of $NZ. Therefore the impact of the change in profit of NZ firms is that ________ for/of $NZ will shift ________ and we expect the value of the $NZ to _________. What happens to the exchange rate when the New Zealand inflation rate is lower than the rest of the world? A lower NZ inflation rate compared to the rest of the world (all else held constant) means that ________ for/of NZ ________ of goods and services will ________. This means that ______ for/of $NZ in the foreign exchange market will shift ________. We therefore expect the value of the $NZ to _______.
The following paragraphs discuss the impact of various economic events on the exchange rate. Complete the paragraphs by filling in the blanks. Use any of the words from the following list (you can use each of these words as many times as you wish but choose carefully - your sentence must make grammatical sense):demand
supply
left
right
buy
sell
imports
exports
rise
fall
increases
decreases
What happens to the current account balance and the exchange rate when the following happens?
Suppose that New Zealand firms become more profitable relative to foreign firms and so increase their payment of dividends (everything else held constant). The value for net foreign income therefore ________ and the value of the current account balance will _______.
Payment of NZ dividends to foreign owners affects the _______ or/of $NZ while payments of foreign dividends to NZ owners of foreign companies affects the _______ for/of $NZ.
Therefore the impact of the change in profit of NZ firms is that ________ for/of $NZ will shift ________ and we expect the value of the $NZ to _________.
What happens to the exchange rate when the New Zealand inflation rate is lower than the rest of the world?
A lower NZ inflation rate compared to the rest of the world (all else held constant) means that ________ for/of NZ ________ of goods and services will ________. This means that ______
for/of $NZ in the foreign exchange market will shift ________. We therefore expect the value of the $NZ to _______.
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