Discuss the merits and drawbacks to hedging currency transactions even though PPP states that supply and demand for currencies will come into equilibrium in the long run.
Explain what the Balance of Payments is and provide some details and examples of the components of the Current Account and the Capital/Financial Account. (10 marks) Establish clearly how two of the parities (i.e., Purchasing Power Parity (PPP) and Interest Rate Parity (IRP)) relate specific accounts of the Balance of Payments to the movements of […]