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The leverage property of the exchange rate

{}Posted in2023/2/26 7:57:04 | 6Browse

What ForexrebateforExness the leverage property of the cashbackforexexness forexrebates The leverage property of the exch cashback forexge rate means that changes Forex rebate for Exness the level of the exchange rate will bring about changes in other macroeconomic variables The content of the leverage property of the exchange rate In the process of deciding the level of the exchange rate, it is necessary to take into account both the ratio property of the exchange rate, that is, the level of the exchange rate should be consistent with the basic conditions of the macroeconomy, forexcashrebate the leverage property of the exchange rate, that is, the level of the exchange rate should be able to influence the specific macroeconomic The leverage property of the exchange rate is reflected first of all in the ability of the exchange rate to influence the rate of economic growth and employment level of a country The undervaluation or downward floating of the exchange rate of a countrys currency is beneficial to the rate of economic growth and employment level of a country The transmission mechanism, first, is through the impact on aggregate aggregate demand: the undervaluation or downward floating of the exchange rate of a countrys currency makes the foreign price of domestic products (foreign currency prices) fall, which is beneficial to exports and increase the demand for exported products, while at the same time making the domestic price of foreign products (local currency price) rise, thus discouraging imports and increasing the demand for imported substitutes, ultimately leading to an increase in aggregate demand and, if a country still has idle resources (labor, capital, etc.), to an increase in aggregate output and higher employment levels Second, by affecting the formation of capital and investment in aggregate to affect total output: the undervaluation or downward fluctuation of a countrys currency exchange rate, on the one hand, is conducive to its absorption of FDI (its transmission mechanism is mainly through the role of the decline in relative production costs and wealth effects), which leads to an increase in investment in the country; on the other hand, due to the rise in the relative price of imported products, leading to a decline in the propensity to import consumption and an increase in the propensity to save, which is conducive to the formation of capital and an increase in investment output is On the other hand, an increase in the relative price of imported products leads to a decrease in the propensity to import and consume and an increase in the propensity to save, which is conducive to the formation of capital and an increase in investment. The leveraging property of the exchange rate is also reflected in the ability of the exchange rate to influence the structure of aggregate demand and its allocation at home and abroad, which in turn affects the structure of aggregate output This is equivalent to imposing an invisible umbrella on the domestic export sector and the import substitutes sector, which reduces the competitiveness of the domestic trade sector to improve labor productivity and leads to the consequences of sloppy operation. can be reflected not only between the traded goods sector and the non-traded goods sector, but also within the traded goods sector, the exchange rate of the local currency is undervalued or floated downward, which makes resources favor the traded goods sector with relatively lower returns, thus hindering technological progress and upgrading of the economic structure Experience also proves that the devaluation or undervaluation of a countrys currency leads to the deterioration of its terms of trade; on the contrary, the appreciation of a countrys currency has a crowding-out effect on those inefficiencies that At the same time, an overvalued or appreciated exchange rate facilitates the import of advanced equipment, which in turn facilitates the upgrading of products and the improvement of terms of trade.
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