National currency of a country Z is devaluated by 25%. The coefficient of price elasticity of exports demand (EX) is estimated as 0.4, the coefficient of price elasticity of imports demand (EM) is supposed to equal 0.2. Find whether the devaluation will improve the trade balance of the country.

National currency of a country Z is devaluated by 25%. The coefficient of price elasticity of exports demand (EX) is estimated as 0.4, the coefficient of price elasticity of imports demand (EM) is supposed to equal 0.2. Find whether the devaluation will improve the trade balance of the country.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter28: International Trade And Finance

Section: Chapter Questions

Problem 11SQ

See similar textbooks

Related questions

Q: Question #1: 1.) A statue in central campus is said to have infinite life. However, due to inclement…

A: Capitalized cost is defined as the present worth of a constant annual cost over an infinite analysis…

Q: 1. How much output will this firm produce and what price will it charge if it wants to: maximize its…

A: A monopolistic firm will maximize profits at point where MR = MC. Its total revenue will be maximum…

Q: 5. Assume that a consumer has two goods to consume: medical care services (M) and all other goods…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: 1z

A: The money supply is the supply of currency in an economy. The M1 money supply is the summation of…

Q: 1. Utility and Consumer Surplus A. Use the figure below to fill in the total utility and marginal…

A: Marginal utility is the addition to the total utility when one more unit of a product or a service…

Q: Q2. Consider the following table Apple Orange Pen Quantity in 2020 8 4 10 a. Calculate nominal GDP.…

A: Ans. 2. Nominal GDP is the value of goods and services in the current year. Real GDP is…

Q: The Quick Snap photo machine at the Lemon County bus station takes snapshots in exactly 80 seconds.…

Q: If a country switches from a flexible exchange rate regime to a fixed exchange rate regime, this…

A: These are two types of exchange rate systems. Fixed exchange rate refers to when a country's…

Q: [CLO-6] Which investment project is guaranteed to be accepted for an evaluation useful life of 6…

A: MARR is the the minimum acceptable rate of return. Below MARR firm will not accept any investment.…

Q: For output levels of 1, 2, 3, 4, 5 and 6 units, a competitive firm's total costs are $142, $172,…

A: Profit maximize when MC = MR MC is marginal cost and calculated by MC = (TCn - TCn-1)/(Qn - Qn-1)…

Q: To answer this question please refer to chapter 13, "Development Economics: The Wealth and Poverty…

A: Charles Wheelan's Naked Economics:Undressing the Dismal Science is a simple book to understand the…

Q: What is the marginal benefit associated with producing six units of the control variable, Q…

A: Marginal benefit refers to additional benefit derived from producing one more unit of input.

Q: You want to buy a new machine. It's going to cost $200,000 and have a salvage value of $15,0 after 7…

A: Let us assume the annual revenue which would provide 12% return be 'x' . If we discount the net…

Q: Use Figure 1 above to determine the effect of the following changes on the exchange rate. For each…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: Multiple Choice O produce 1,000 square feet of construction per month in the short run produce 800…

A: In perfectly competitive market, firms do not have any market power to control the other so they are…

Q: Which of the following is an example of a public good? Group of answer choices All of the other…

A: Answer: A public good is a god that is available to everyone in society. In other words, public…

Q: One maintenance contract is free for two years and is followed by three years of $5,000 payments,…

A: Maintenance contract is a business understanding between a project worker and client covering the…

Q: Suppose the production function for high quality brandy is given by : Q = √KL Where q is the output…

A: Given Information : Production function is given as: Q =√KL K =100 Q = 10 √L

Q: Using a diagram, explain what is meant by income and substitution effect of a price change

A: A change in the price of a good has two effects namely income and substitution effect such that the…

Q: If a country's real GDP per capita declines, this means that which of the following may have…

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

Q: Explain 2 ways a government could increase the consumption of merit goods

A: Merit goods are the goods whose consumption and production should be encouraged as these goods add…

Q: The quantity demanded, Q, of a monopolist’s product is a function of price, P, as given by the…

A: Monopoly is the single firm in the market producing unique good.

Q: Why mu Ist the margina equal to the marginal cost for a producer? Explain. ue be

A: Marginal revenue (MR) is the increase in revenue that results from the sale of one additional unit…

Q: Tim has borrowed money from Lisa and proposed to pay back the money in two payments. Tim suggested…

A: An economic value is a kind of value which indicates some willingness to pay for this good or some…

Q: Section A: Instruction: This section is mandatory and contains only one question. Question 1: There…

A: Answer -

Q: Which of the following accurately describes the fundamental problem at the core of all economic…

A: Economics is a branch of social science that deals with the efficient allocation of finite resources…

Q: If the central bank raises the inflation target by 3%, we would expect that: A. the real interest…

A: Inflation is defined as an increase in the price of goods and services purchased by households. The…

Q: Suppose the yen is expected to appreciate by 4% against the pound in one year. If the nominal…

A: Currency appreciation is an increase in the value of one currency in relation to another currency.…

Q: Determine the mode choice (personal vehicle or bus system) for the following regression model:…

A: The utility is the measurement of the level of satisfaction one receives from consuming a good or…

Q: illustrate the following situation and its impact on the interest rate and money supply (i) the bank…

A: The monetary policies are those policies which are enacted by the central bank of a country to…

Q: Explain concept of GVA

A: Domestic income is GDP which refers to the summation of market value of goods and services produced…

Q: d. Suppose a price floor of $7.00 is imposed. What would be the result? Explain e. At the $7 price…

A: A price floor is a minimum price set by the regulatory bodies, below this price the product can not…

Q: 12. What is the purpose of the following fiscal policies? a. Contractionary b. Expansionary fiscal…

A: In economics and political science, fiscal policy is the use of government revenue collection and…

Q: 1.10 1.20 - 226 -215 - 106 - 89 -56 -37 -44 -25 - 52 -32 -70 -51 - 93 -76 - 118 - 102 A. quantities.…

A: The prisoner's dilemma is a decision-making paradox in which two people acting in their own…

Q: The A-1 Corporation supplies airplane manufacturers with preformed sheet metal panels that are used…

A: Marginal Product of labor:- Whenever an extra unit of labour (throughout many situations, one new…

Q: Hand written plz If a country switches from a flexible exchange rate regime to a fixed exchange rate…

A: A floating (or flexible) exchange rate system is one in which a country's exchange rate changes over…

Q: Using a Short Run Aggregate Supply-Aggregate Demand diagram, what is the effect of a decrease in…

A: Aggregate supply: It refers to the total output of the economy. The increase in the total output of…

Q: H10. Write a complete body paragraph that includes evidence of several in-text citations. This body…

A: Global warming The brief rising of the planet's total temperature is referred to as global warming.…

Q: Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small"…

A: In the figure, it is given that the world price is $ 3. The country will import the good because…

Q: 33. The chart below is the prodution cost of US. and UK. U.S. U.K. Wheat (bushels/labor hour) 6 1…

A: Comparative advantage is the basis for international trade.

Q: Our textbook discusses two methods of regulating natural monopolies. One of them is price cap…

A: A price-cap regulation is a kind of economic regulation that limits the amount of money a utility…

Q: A real estate developer bought land for $170 000.00 down and monthly payments of $8 450.00 for 5…

A: Given Down payment =$170,000.00 Monthly payment A=$8450.00 n=5 years r =8.75% compounded…

Q: Analyse how the level and pattern of household spending may change when GDP decreases

A: Gross Domestic Product (GDP) is the value of final goods and services produced in the domestic…

Q: LAST WORD Suppose that minimum efficient scale for producing items with a 3-D printer is 100 times…

A: The lowest point on a cost curve at which a corporation can manufacture its product at a competitive…

Q: In Vacanada, the monetary base is $20 billion, total desired bank reserves are $1 billion, and total…

A: Values given are:- Monetary base = 20 billion Total desired bank reserves = 1 billion Total bank…

Q: ** PLEASE LOOK AT BOTH IMAGES , THEY COMPLEMENT EACHOTHER **

A: The consumer surplus is the area below the demand curve and above the market price. The less price…

Q: Given the following parameters: Perfect Competition in Output Market Perfect Competition in Labour…

A: The wage is determined by the market forces of demand and supply. The equilibrium wage is equated…

Q: Using the supply and demand analysis of the market for reserves, indicate how the following…

A: Meaning of Demand and Supply: The term demand refers to the willingness of an individual to…

Q: the following data for a country: Category ulation n under 16 years of age or institutionalized por…

A: Given that, Total population: 500 million Institutionalised: 120 million Not in labour force: 140…

Q: A developing country wants to set up a subsidy system to help its farmers. Which of these subsidies…

A: The agribusiness subsidies are the vital piece of the ranchers of India and are vital for the…

Concept explainers

Factor Models

Many attributes might be related to an asset's risk, including market capitalization (size), dividend yield, growth, price-earnings ratio, etc. The use of these traditional descriptors, however, presents a few problems:

Question

A6 National currency of a country Z is devaluated by 25%. The coefficient of price elasticity of exports demand (EX) is estimated as 0.4, the coefficient of price elasticity of imports demand (EM) is supposed to equal 0.2. Find whether the devaluation will improve the trade balance of the country.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A high value of a currency would result in which of the following?Select one:a. Greater competitiveness of exportsb. More exportsc. Increased demand of the higher value currencyd. Increased demand of exports of higher currency value products e. More ImportsIf
Multiple choice A surplus on the current account of the balance of payments indicates that: (1) Financial inflows are less than financial outflows;(2) Imports are greater than exports;(3) Financial inflows are greater than financial outflows;(4) Exports are greater than imports.
Purchasing power parity impies that a standardize good should sell for the same price internationally after adjusting for exchange rates. First mover advantage included economies of scale which later entrants find it difficult to match. A. Statement 1 is correct but statement 2 is wrong B. Statement 1 is wrong but statement 2 is correct C. Both statements are correct D. Both statements are wrong
A9 In which of the following scenarios are currency speculators likely to attack a country's currency? When a currency is manipulated such that it makes imports more attractive for domestic residents. When the currency is fairly valued. When the currency is undervalued. When the value of the currency is pegged below the market equilibrium rate. When a currency is manipulated such that it makes a country's exports more attractive.
If U.S. securities pay 6 percent interest, and if Great Britain’s securities pay 8 percent interest, then a. pounds depreciate relative to dollars. b. pounds appreciate relative to dollars. c. Great Britain’s imports will fall. d. Great Britain’s exports will rise.
A strong US dollar tends to A. Reduce exports to foreign buyers B. Reduce imports from foreign sellers
The nation of Elbonia has long banned the exportof its highly prized puka shells. A newly electedpresident, however, removes the export ban. Thischange in policy causes the nation’s currency to_________, making the goods Elbonia imports_________ expensive.a. depreciate; lessb. depreciate; morec. appreciate; lessd. appreciate; more
Under which of the following would devaluation be unseuccesful? Select one: a) Domestic prices remain stable b) Inflation occurs c) Other countries do not retaliate d) The demand for imports is elastic e) Domestic prices fall
Explain thesituation in terms of balance of payments and the effect of Sri Lanka’s economiccrisis on Indian economy.
When the dollar buys less foreign currency, there has been a depreciation of the dollar. True False
Explain absolute and relative purchasing power parity. Write down their equationsDoes empirical evidence support these theories?
Define Nominal exchange rate Real exchange rate Spot rate Forward rate Purchasing power parity (PPP)