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Open Economy Macroeconomics
Question
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Describe the equilibrium in foreign exchange market.

Answer

Equilibrium in a freely fluctuating foreign exchange market is brought about by the interaction of forces of demand and supply of foreign exchange.

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Some More Questions From Open Economy Macroeconomics Chapter

Balance of payment always balances. Comment.

When does a situation of deficit/surplus in BOP arise?
or
Explain meaning of deficit in BOP.

Distinguish between BOT and BOP. 

Distinguish between current account and capital account of BOP account. Mention any two transactions (components) of each.

State any four items of current account of BOP account.

Distinction between Balance on trade account and Balance on current account

What does a deficit in current account of BOP indicate?

State any four components (items) of capital account of BOP account.

Export and import of machines recorded in capital account of BOP account. True or false? Give reasons. 

What are Autonomous and Accommodating transactions in BOP account? Give an example of each. 
or
Excess of foreign exchange receipts over foreign exchange payments on account of accommodating transactions equal deficit in BOP. True or false? Give reasons.