Search for tag: "exchange rates"

Salam is a sale whereby the seller undertakes to deliver a certain commodity to the buyer at a future date in exchange of the full financial consideration, the price, paid on the spot. This video is…

Ijara refers to leasing whereby the ownership of a usufruct of an asset is transferred to another person for a specified period in exchange of a specified consideration known as rent. This video is…

In this chapter, Professor Sachs discusses international trade and how it is affected by the exchange rate, which is in turn affected by financial flows and the differences of interest rates at home…

This chapter focuses on exchange rates and how they impact aggregate demand management in an open economy. It makes use of the C + I + G + (X - M) = GDP formula of the net trade balance in the…

This chapter begins by explaining the impact of aggregate demand in an open economy, via fixed and flexible exchange rates. In a fixed or pegged exchange rate, the central bank doesn’t allow…

This chapter focuses on stabilization, which is the reduction of inflation to a very low level, and explains the tools to understand stabilization. These tools include stabilizing the exchange rate,…

This chapter focuses on the purchasing power parity (PPP) and the interest rate arbitrage. Professor Larraín begins by explaining the law of one price, which states that a good must cost the…

This chapter focuses on what is behind a currency crisis, which is when the exchange rate depreciates and the local currency loses values. There are three types of models that explain the reason for…

This chapter discusses the real exchange rate and the role of non-traded goods. The real exchange rate is a measure of a country’s competitiveness, defined through a simple equation. The Big…

This chapter discusses monetary policy, and focuses on the difference between fixed and floating exchange rates. It begins by explaining the role that a central bank plays in maintaining its exchange…

In this chapter, Professor Larraín covers the different forms of exchanging arrangements and some real-world cases of collapsing exchanging arrangements, or currency crises. A common case of…