Currency speculators sell Canadian dollars whenever they think that the Select one: O A. Canadian real GDP is increasing. B. world prices for Canadian resources are falling. O C. Canadian inflation rate is falling. OD. demand for Canadian dollars is increasing. O E. real interest rates will increase due to the Bank of Canada's policy.
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- If a countrys currency is expected to appreciate in value, what would you think will be the impact of expected exchange rates on yields (e.g., the Interest rate paid on government bonds) in that country? Hint: Think about how expected exchange rate changes and interest rates affect a currencys demand and supply.What is Canadian currency today? OA. convertible paper money. OB. fiat money. O C. credit money. D. commodity money. O E. deposit money.1. A. Explain how nominal exchange rate affects real exchange rate.B. Suppose that a chocolate bar costs 20 euros in France and 30 Singaporean dollars inSingapore. If the exchange rate is 1.20 euros per Singaporean dollars, What is the realexchange rate?2. Suppose the economy is in recession. Policymakers estimate that aggregate demand is$100 billion short of the amount necessary to generate the long run natural rate of output.That is, if aggregate demand were shifted to the right by $100 billion, the economy wouldbe in long run equilibrium.a. Explain the impact on the economy if the government chooses to use fiscal policy tostabilize the economy and the marginal propensity to consume (MPC) is given as0.75 with no crowding out.b. If there is a crowding out effect and investment is very sensitive to changes in theinterest rate, should the government increase spending more or less than this amount?3. Suppose, OPEC decides to cut down oil production, causing oil price to go up.a. Explain…
- 5 a) Suppose Portugal and England are close trading partners, where Portugal sells wine to England and buys textiles in exchange. The resulting trade balance of Portugal is in a deficit. How would the “price-specie-flow mechanism” would move these countries towards a balance? Make sure you explain the mechanism in your own words. b) Explain which of these countries might experience a high inflation rate during the adjustment. c) How does your answer to part b change if England’s central bank sterilizes the capital flows?2. Inflation in Brazil is 5% and in the US it is 2%. The GDP growth rate is 2% in both countries. The exchange rate is 7 Brazilian real (BRL) per USD. Use Brazil as the domestic country.a. If PPP is true, what will the BRL/USD exchange rate be next year?b. If PPP is true, what will happen to the real exchange rate? Explain with an equation.c. If the quantity theory of money is correct, how fast is the money supply growing in Brazil and the US?PLEASE ANSWER ALL THE QUESTIONS 16. (CLO 6) Explain how changes in exchange rates impact the economy through the aggregate demand- aggregate supply (AD/AS) model. Explain how fluctuations in exchange rates can influence loans and banks. (16.3) 17. Contrast floating exchange rates, a soft peg, hard peg, and merged currency as options that a country’s economy has in terms of managing it’s exchange rate relative to the rest of the world. For each, give a benefit as well as a drawback. (16.4)
- Questions 1)a) Suppose that the exchange rate changed from $1.06 per euro to $1.12 per euro. As a result, we can expectO More than one of the choices are correct.O Our imports to increase.O Our exports to decrease.O Our exports to increase.O Our imports to decrease. b) Which of the following would cause the long run aggregate supply to decrease?O. A civil war in the country leads to destruction of property and loss of life.O. The Federal Reserve purchases $500 million in bonds from the banks.O. An unusually low temperatures in the midwest results in fewer crops than last year.O. A major breakthrough in extraction (fracking) leads to more efficient drilling of natural gas.Cover A strong dollar is normally expected to cause: O low unemployment and low inflation in the U.S. O high unemployment and high inflation in the U.S. O high unemployment and low inflation in the U.S. O low unemployment and high inflation in the U.S. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.Only like if no ai or downvoted for ai content Suppose that the equilibrium exchange rate between the United States and South African is 15.13 Rand per US dollar. Further suppose that the two countries are trading partners with each other. Inflation now rises in South Africa. Which of the following answer choices correctly represents the shift that would occur in the US foreign exchange market? The supply of US dollars would fall. The demand for South African Rands would rise. The supply of South African Rands would rise.
- Suppose that Great Britain and the United States are trading partners. Assume that the initial exchange rate in Great Britain is £0.76= 1$. Now suppose that the opportunity cost of consumption in the United States begin to rise. Which of the following explain what is expected to happen in the British forex market? O The demand for British pounds will decrease, leading to a depreciation of the US dollar. O The supply of British pounds will increase, leading to an appreciation of the British pound. O The supply of American dollars will decrease, leading to a depreciation of the British pound. O The demand for American dollars will decrease, leading to an appreciation of the British pound. Please do fast ASAP fast6. In the exchange rate model in Example 7.2, supposethe company continues to manufacture its product inthe United States, but now it sells its product in theUnited States, the United Kingdom, and possibly othercountries. The company can independently set its pricein each country where it sells. For example, the pricecould be $150 in the United States and £110 in theUnited Kingdom. You can assume that the demandfunction in each country is of the constant elasticityform, each with its own parameters. The question iswhether the company can use Solver independently ineach country to find the optimal price in this country.(You should be able to answer this question withoutactually running any Solver model(s), but you mightwant to experiment, just to verify your reasoning.)Which type of money is most likely to see its value fluctuate in the foreign exchange market? O a. fiat money O b. commodity money O c. price-indexed money O d. pegged-exchange rate