1. Exchange Rates Chapter #17 EDWARD BAHAW - Economic Principles and Their Application to Business (ABE)
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3. Floating Exchange Rate in Jamaica EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) S S D Jam$/US$ E Q E Quantity of US dollar traded D Jam$40 = US$1
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5. An increase in demand for foreign exchange in Jamaica EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) S S D 1 D 1 D 2 D 2 E 1 E 2 Q 1 Q 2 Jam$/US$ Jam$40 = US$1 Jam$50 = US$1 Quantity of US dollar traded
6. A decrease in demand for foreign exchange in Jamaica EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) S S D 1 D 1 D 2 D 2 E 2 E 1 Q 1 Q 2 Jam$/US$ Jam$40 = US$1 Jam$30 = US$1 Quantity of US dollar traded
7. A decrease in supply of foreign exchange in Jamaica EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) D D S 1 S 1 S 2 S 2 E 1 E 2 Q 1 Q 2 Q US$ Jam$/US$ Jam$40 = US$1 Jam$50 = US$1
8. An Increase in supply of foreign exchange in Jamaica EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) D D S 1 S 1 S 2 S 2 E 2 E 1 Q US$ Q 1 Q 2 Jam$40 = US$1 Jam$30 = US$1 Jam$/US$
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10. The Fixed Exchange Rate EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) D D S S Official Rate Bds$2 = US$1 Q US$
11. Fixed Exchange Rate and a Surplus in the Foreign Exchange Market D 1 D 1 S S Official Rate E 1 Bds$2 = US$1 Bds$1 = US$1 Bds$/US$ Q US$ Q S Q D Surplus EDWARD BAHAW - Economic Principles and Their Application to Business (ABE)
12. Increase in Money Supply under a Fixed Exchange Rate D 1 D 1 S S D 2 D 2 Official Rate E 1 E 2 Bds$2 = US$1 Bds$1 = US$1 Bds$/US$ Q US$ Q D = Q S Jamaican Central Bank must purchase the surplus foreign exchange from the market . This causes an increase in the money Supply EDWARD BAHAW - Economic Principles and Their Application to Business (ABE)
13. Fixed Exchange Rate and a Shortage in the Foreign Exchange Market EDWARD BAHAW - Economic Principles and Their Application to Business (ABE) D D S 1 Official Rate Q US$ Bds$2 = US$1 Bds$/US$ Bds$3 = US$1 S 1 E 1 Q S Q D Shortage
14. Decrease in Money Supply under a Fixed Exchange Rate D D S 1 Official Rate Q US$ Bds$2 = US$1 Bds$/US$ Bds$3 = US$1 S 1 E 1 S 2 S 2 E 2 Q D = Q S Jamaican Central Bank must sell foreign exchange to the market . This causes a decrease in the money Supply EDWARD BAHAW - Economic Principles and Their Application to Business (ABE)
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