Please state why it’s wrong or uncertain. True or False or uncertainty11. If exports are payable in dollars, while imports require payment in for-eign currency, a change in the nominal exchange rate automaticallytransfers into a change in the price of imported goods relative to localgoods.12. Eurobanking have grown rapidly because of lack of regulation and con-sequent opportunity for Eurobanks to pay slightly higher deposit ratesand make international loans at slightly lower loan rates.13. If the balance on current account is positive (a surplus), adjustment ofthe balance to zero would usually require the real exchange rate to rise.14. With flexible exchange rates, central banks do not have to finance cur-rent account deficits because balance of payments equilibrium is re-stored by changes in exchange rates.15. Canada should move to a common currency with the United States onceit has much the same inflation rate as the United States.16. The variability of real exchange rates has been much greater when acountry adopts of fixed exchange rates (as under the Bretton-Woodssystem) than when it floats its nominal exchange rate.

"Since you have asked multiple questions, we will solve first question for you .. If you want any…

11. If exports are payable in dollars, while imports require payment in for- eign currency, a change in the nominal exchange rate automatically transfers into a change in the price of imported goods relative to local goods.

11. If exports are payable in dollars, while imports require payment in for- eign currency, a change in the nominal exchange rate automatically transfers into a change in the price of imported goods relative to local goods.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 8PA

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Question

Please state why it’s wrong or uncertain.

True or False or uncertainty
11. If exports are payable in dollars, while imports require payment in for-
eign currency, a change in the nominal exchange rate automatically
transfers into a change in the price of imported goods relative to local
goods.
12. Eurobanking have grown rapidly because of lack of regulation and con-
sequent opportunity for Eurobanks to pay slightly higher deposit rates
and make international loans at slightly lower loan rates.
13. If the balance on current account is positive (a surplus), adjustment of
the balance to zero would usually require the real exchange rate to rise.
14. With flexible exchange rates, central banks do not have to finance cur-
rent account deficits because balance of payments equilibrium is re-
stored by changes in exchange rates.
15. Canada should move to a common currency with the United States once
it has much the same inflation rate as the United States.
16. The variability of real exchange rates has been much greater when a
country adopts of fixed exchange rates (as under the Bretton-Woods
system) than when it floats its nominal exchange rate.

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