3. In which country would you save if the nominal interest rate equals 4% in the U.S. and 1% in Germany, the current dollar-Euro exchange rate (E$/ €) is equal to 1.2 and your expected exchange rate one year from now (Ee$/€) equals 1.25.
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- Assume that the level of interest rates is about the same in the US and in the UK. You buy a British pound today at $1.10/pound and sell it after 1 year for $1.17/pound . In this case, you difference in return from holding pounds instead of dollars was a___ of ____. A. loss, 7% B. loss, 6.36 % C. gain , 7 % D. gain, 6.36%Suppose the demand for dollars (in exchange for euro) is given by the equation: D = 160 + 0.020Y(for) - 550 r(for) + 700r - 28 e(nom) The supply of dollars is given by: S = 80 + 0.022Y + 300r(for) - 640r + 24 e(nom) Suppose output and the real interest rate in the domestic country and the foreign country are: Y = 8,000, Y(for) = 9000, r = 0.060, r(for) = 0.040 Calculate the equilibrium value of the nominal exchange rate. In your calculations, carry out your intermediate steps to three decimals and round your answer to three decimals.Assume that relative to today, Dollar is expected to depreciate against the Euro by 10% in real terms over the next period. Assume further that the expected rates of inflation (over the next period) is 10% and 5% in Australia and Europe, respectively. If the real interest rate in Europe r€ = 5%, choose the correct option: A. r$ = -5% B. r$ = 10% C. The above information is not enough to calculate r$ D. r$ = 20% E. r$ = 15%
- : In 2021 the exchange rate between the Haitian Gourde and the US dollar is 50 to 1. If Haiti experience inflation at the rate of 17% while the US experience inflation at a rate of only 4.7% per year. Assuming the exchange rate will vary at the same rate as inflation, what will be the exchange rate in 2026?Suppose that a U.S. firm converts dollars into pounds in order to invest in a British enterprise in the U.K. A year later, the return on the investment is 12 percent in terms of pounds. If, during that period, the dollar appreciated against the pound, then the return on the investment in dollar terms would be A.) dependent on the inflation rate, not the exchange rate. B.) also 12 percent. C.) less than 12 percent. D.) greater than 12 percent.7) On may 1,2015 the yen/dollar and euro/dollar exchange rates were ¥120.15 and €0.8929, respectively. What is the euro/yen cross exchange rate?
- Suppose the annual rate of inflation in the UK is 5.67%, and the annual rate of inflation in Europe is 2.95%. If the EUR depreciates relative to the GBP by 3.60% in real terms, then which of the following would be correct? a. Nominal exchange rate appreciation by 0.630%. b. Nominal exchange rate depreciation by 1.053%. c. Nominal exchange rate appreciation by 6.320%. d. Nominal exchange rate depreciation by 1.959%. e. None of the options in this question are correct.The ECU as a basket of currencies. What is the percentage/weight of the ECU's total value accounted by the Spanish peseta? Refer to Exhibit 3.4 in the text. Would you get a different result if you valued the ECU in Japanese yen instead of the U.S. dollar? Would you expect this weight to change if the ECU depreciates by 10 percent against the U.S. dollar? For reference (image included)What is the spot/current rate for the British pound (GBP) in terms of the U.S. dollar (USD)? Or, from the U.S. perspective, what is the direct quote on pounds?)
- The ECU as a basket of currencies. What is the percentage/weight of the ECU's total value accounted by the Spanish peseta? Refer to Exhibit 3.4 in the text. Would you get a different result if you valued the ECU in Japanese yen instead of the U.S. dollar? Would you expect this weight to change if the ECU depreciates by 10 percent against the U.S. dollar?Accel Co. produces a standard tennis racket in the Netherlands and sells it online to consumers in the United States. This racket competes with a tennis racket produced by Malibu Co. in the United States, which is of similar quality and is priced at about $140. Accel has set the price of its tennis racket at 100 euros. Assuming that the euro's exchange rate (during the sales month in question) was $1.60, then the price of Accel's racket to U.S. consumers is $_________ (enter a whole number). Because U.S. consumers could buy a Malibu racket for only $140, Accel only sold about 1,000 rackets to U.S. consumers in that month. Since then, however, the euro's value has weakened; this month, the euro's exchange rate is only $1.20. U.S. consumers can now purchase the Accel tennis racket for $_________(enter a whole number), which is less than that charged for the U.S. Malibu racket. In this month, Accel sold 5,000 rackets. The U.S. demand for this tennis racket is price-elastic (sensitive to…The price for a device to do a digital-based design in the United States is USD 185. For the same device in Indonesia, the price is Rp. 2,500,000. If the Rupiah exchange rate per USD is Rp. 13,944, then calculate what the real exchange rate is? Give conclusion whether the price of this device is more expensive / cheaper in Indonesia!
