China and India are trading partners, and there are international savings flows between the two countries. China’s currency is the yuan and India’s currency is the rupee. If interest rates in China begin to rise relative to those in India, which of the following changes can we expect to see in the Indian foreign exchange market? Selected Answer: Demand for the Chinese yuan would fall. Answers: Demand for the Chinese yuan would fall. Demand for the Indian rupee would rise. Supply of the Indian rupee would fall. Supply of the Chinese yuan would fall.

China and India are trading partners, and there are international savings flows between the two countries. China’s currency is the yuan and India’s currency is the rupee. If interest rates in China begin to rise relative to those in India, which of the following changes can we expect to see in the Indian foreign exchange market? Selected Answer: Demand for the Chinese yuan would fall. Answers: Demand for the Chinese yuan would fall. Demand for the Indian rupee would rise. Supply of the Indian rupee would fall. Supply of the Chinese yuan would fall.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter28: International Trade And Finance

Section: Chapter Questions

Problem 11SQ

See similar textbooks

Similar questions

Assume the following exchange rates Value of Canadian Dollar in U.S dollars $.92 value of New Zealand dollar in U.S dollars $.32 Value of Canadian dollar in New Zealand dollars NZ $3.00 Given this information, starting with U.S dollar, you and others can perform triangular arbitrage by________. a. Using U.S dollar to buy New Zealand dollar at $.32. b. Using U.S dollar to buy Canadian dollar at $.92 c. Using New Zealand dollar to buy Canadian dollar at NZ$3.00 d. Using U.S dollar to buy Canadian dollar at NZ$3.00
For your job as the business reporter for a local newspaper, you are given the assignment of putting together a series of articles on multinational finance and the international currency markets for your readers. Much recent local press coverage has been given to losses in the foreign exchange markets by JGAR, a local firm that is the subsidiary of Daedlufetarg, a large German manufacturing firm. Your editor would like you to address several specific questions dealing with multinational finance. Prepare a response to the following memorandum from your editor: TO: Business Reporter FROM: Perry White, Editor, Daily Planet RE: Upcoming series on multinational finance In your upcoming series on multinational finance, I would like to make sure you cover several specific points. In addition, before you begin this assignment, I want to make sure we are all on the same page, as accuracy has always been the cornerstone of the Daily Planet. I’d like a response to the following questions before…
For your job as the business reporter for a local newspaper, you are given the assignment of putting together a series of articles on multinational finance and the international currency markets for your readers. Much recent local press coverage has been given to losses in the foreign exchange markets by JGAR, a local firm that is the subsidiary of Daedlufetarg, a large German manufacturing firm. Your editor would like you to address several specific questions dealing with multinational finance. Prepare a response to the following memorandum from your editor: TO: Business Reporter FROM: Perry White, Editor, Daily Planet RE: Upcoming series on multinational finance In your upcoming series on multinational finance, I would like to make sure you cover several specific points. In addition, before you begin this assignment, I want to make sure we are all on the same page, as accuracy has always been the cornerstone of the Daily Planet. I’d like a response to the following questions before…
In answering the question, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis. Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. Suppose that Singapore wants to return the exchange rate to 1 euro = 0.58 Singaporean dollars. Should the Singaporean central bank buy or sell euros in the foreign exchange market? Instead of buying or selling euros, what domestic open-market operation can the Singaporean central bank use to achieve the same result? Explain.
Provide three (3) examples of government policies for restricting currency convertibility.
This is not a writing assignment, this is a multiple-choice question Which of the below statements does NOT include international exchange rates, how these are determined, and how exchange rates impact the economy? Group of answer choices By increasing real interest rates to prop up the British pounds the British government would also be boosting the British economy which was in a state of economic recession at that time. To prop up (increase) the exchange rate for the British pound the British government could use monetary policy and increase real interest rates. The higher interest rates on British bonds would make them more interesting to foreign investors who would need to get more British pounds to purchase British bonds - thus increasing the demand for the British pound. To prop up (increase) the exchange rate of the British pound the British government could use its reserves of foreign currencies to purchase British pounds, thus directly increasing the demand for the…
Participants in the foreign exchange market are asked to explain the viewpoint of forex traders, brokers, individuals / companies, speculators and regulatory authorities.
QUESTION 3 Suppose the price of platinum were to rise. Using a diagram, explain how the change in the price of this commodity would affect the rand-dollar exchange rate, ceteris paribus.
S1: The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. S2: When the demand of foreign currency is greater than its supply, the currency becomes more valuable. A. both are true B. both are false C. S1 is true D. S2 is true
This is not a writing assignment, this is a multiple-choice question Which of the below is NOT a factor determining the demand for a currency such as the U.S. dollar? Group of answer choices All else equal, the greater demand for a country's exports will cause its currency to appreciate. All else equal, foreign capital is attracted by emerging economies with unstable political history and greater volatility in their financial and stocks markets. All else equal, higher real interest rates offered in the U.S. will make it lucrative for foreign investors to purchase U.S. bonds that pay a higher interest rate. Foreigners will need to purchase U.S. dollars to purchase U.S. treasuries. A country with a booming economy will often have a currency that is appreciating. Strong growth presents economic investment opportunities and attracts financial capital from other countries. If the country in question is the U.S. then the infow of foreign financial capital must be converted to U.S.…
Case Summary :Managing Foreign Currency Exposure at 3M The closing case explores the implications of changing currency values at 3M. With about 60 percent of its annual revenues coming from outside the United States, 3M is especially vulnerable to fluctuations in exchange rates. Indeed, 3M believes that adverse currency movements cost the company some $42 million in pretax profits in 2018, and $11 million in 2017. 3M uses various strategies to reduce its exchange rate risk including forward contracts and foreign currency debt. 1-a) If the dollar depreciates in value against most other countries over the next year, what will the impact be on 3M? 1-b) Should3M hedge against adverse movements on foreign exchange rates? How should it do this?
In 1971 a British company, Beecham Group, received a Swiss franc loan of CHF 100 million. By the time the loan was repaid in 1976, the British pound had depreciated significantly against the Swiss franc. Which of the following statements is correct? A. The cost in British pounds of making the repayment did not change. B. The financial manager of Beecham Group would not be concerned about the change in the value of the pound. C. The change in the value of the British pound increased the profitability of the Beecham Group. D. The cost in British pounds of making the repayment increased significantly.