Suppose that individuals and firms in a nation are holding the desired proportion of their wealth in

Question:

Suppose that individuals and firms in a nation are holding the desired proportion of their wealth in foreign bonds to begin with. Suppose that there is then a once-and-for-all decrease in the (i.e., the domestic currency appreciates and the foreign currency depreciates). What is the adjustment that the simple balance model presented in Section 15.4a postulates?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...