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TiliK225 [7]
3 years ago
15

Initially, the exchange rate between Macedonian denars and Canadian dollars is in equilibrium. Then, there is a decrease in dema

nd for Canadian dollars. As a result of a decrease in demand for Canadian dollars, what happens to Macedonia's currency in relation to Canada's currency?
a. no change in Macedonian denars
b. an appreciation in Macedonian denars
c. a depreciation in Macedonian denars
Also, as a result of a decrease in demand for Canadian dollars, what happens to Canada's currency in relation to Macedonia's currency?
a. a depreciation in Canadian dollars
b. no change in Canadian dollars
c. an appreciation in Canadian dollars
Business
1 answer:
Nitella [24]3 years ago
6 0

Answer:

b. an appreciation in Macedonian denars 

a. a depreciation in Canadian dollars

Explanation:

An appreciation of currency means the value of a currency rises in relation to another country's currency.

Depreciation of a currency is when the value of a currency of a county falls in relation to another country's currency.

If there is a decrease in demand for Canadian dollars, the value of Macedonia's currency increases because more of Macedonia's currency is demanded for in relation to Canadian dollars. Therefore, Macedonia's currency would appreciate while Canadian dollars would depreciate.

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Bank panic happens when in a banking system, many banks suffer from a bank run, that is, many of its depositors loss their confidence that the bank may repay their deposit, thus they want to withdraw their deposit put with the bank.

As Banks operating using notably high leverage, many of its assets are not highly liquid ( e.g: loans, bonds that will not be paid until maturity) and the fact that they lend to and borrow from each others frequently and heavily, a bank run happens for one bank may cause liquidity issues to not only that bank but also other banks in the systems.

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