Econ Determinants Forex

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8 Terms

1
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Speculation currency will increase

DA → SB →

2
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Income increase

DB→SA→

3
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Price level inflation increase

DA ← SB←

4
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It could also be assumed that if A experiences inflation and B doesn’t A will buy B’s exports as they are relatively cheaper which would mean:

DB→SA→

5
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Interest rates (increase gov budget deficit) increase

DA → SB→

6
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increase interest rates lead to

currency appreciating and net export decreasing

7
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If B’s interest rates decreased relative to A’s

DB ←SA←

8
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Tastes increase for B’s export

DB→SA→