RBA decreasesits targetinterest rate. What would be the impact on the Australian dollar and stimulate net exports. In your answer, discuss the actions of Australian and foreign residents towards the Australian dollar.
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Suppose the RBA decreasesits targetinterest rate. What would be the impact on the Australian
dollar and stimulate net exports. In your answer, discuss the actions of Australian and foreign
residents towards the Australian dollar.
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- Suppose that a Swiss watchmaker imports watch components from Sweden and exports watches to the United States. Also suppose the dollar depreciates, and the Swedish krona appreciates, relative to the Swiss franc. Speculate as to how each would hurt the Swiss watchmaker(a) In this case, Cunneen thinks that the RBA wants to [maintain] the value of the Australian dollar. (b) If the RBA wanted to reduce the value of the Australian dollar, it would need to [reduce] Australian interest rates. (c) If the RBA’s strategy was to increase the value of the Australian dollar, it would have taken steps to cause [less] capital to flow into Australian financial markets. (d) A strategy of reducing the value of the Australian dollar via conventional monetary policy would be [more, less, just as] difficult, if interest rates overseas were to rise. (e) Were the RBA to want the value of the Australian dollar to be higher, they would need the demand curve for the Australian dollar in the FX market to [shift to the right, shift to the left, not shift at all] . (f) Were the RBA to want the value of the Australian dollar to be lower, they would need the supply curve for the Australian dollar in the FX market to [shift to the right,…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?
- Consider the bilateral exchange rate between Australia and New Zealand. Suppose $1 AUD buys $1.05 NZD, the Australian price level is $100 AUD and the New Zealand price level is $110 NZD. Which of the following is TRUE? a.The Australian dollar has more real purchasing power than the New Zealand dollar b.In the long run, the New Zealand dollar is likely to depreciate against the Australian dollar c.The real exchange rate is 0.90 d.The real exchange rate is 1.1018. If more American tourists visit South Africa. The _____________________ of dollars increases and the dollarin the rand/dollar exchange rate _____________________.A Supply; depreciatesB Demand; depreciatesC Supply; appreciatesD Demand; appreciatesSuppose that the European Central Bank enacts expansionary policy. Everything else held constant, this will cause the demand for U.S. assets to ________ and the U.S. dollar to ________. Question 4 options: increase; depreciate decrease; depreciate decrease; appreciate increase; appreciate
- ASAP At the beginning of the year, the exchange rate between the Brazilian real and the U.S. dollar was 1.2 reals per dollar. Over the year, Brazilian inflation was 8 percent and U.S. inflation was 2 percent. Explain what should we expect to happen to the U.S. dollar relative to Brazilian real? Provide theintuition.The following report appeared in the New York Times on August 7, 1989 ("Dollar's Strength a Surprise," p. D1): But now the sentiment is that the economy is heading for a "soft landing," with the economy slowing significantly and inflation subsiding, but without a recession. This outlook is good for the dollar for two reasons. A soft landing is not as disruptive as a recession, so the foreign investments that support the dollar are more likely to continue. Also, a soft landing would not force the Federal Reserve to push interest rates sharply lower to stimulate growth. Falling interest rates can put downward pressure on the dollar because they make investments in dollar-denominated securities less attractive to foreigners, prompting the selling of dollars. In addition, the optimism sparked by the expectation of a soft landing can even offset some of the pressure on the dollar from lower interest rates. a. Show how you would interpret the third paragraph of this report using the…What determines the exchange rate? If a nation's currency appreciates in the foreign market, how will this impact net exports? Explain. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- 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)Japan and the United States are major trading partners and the exchange rate between the Japanese yen and the United States dollar is determined in a flexible foreign exchange market. (a) Assume real income increased in the United States. Explain how this increase in income in American GDP will affect the FOREX graph of the Yen b) Will each of the following increase, decrease, or stay the same as a result of the increase in the United States real income? (i) Japan’s net exports. Explain. (ii) Unemployment in Japan. Explain. (iii) Japan’s long-run aggregate supply (c) Assume instead household savings increased in the United States. What would happen on loanable funds market in the United States with the supply of loanable funds, and show the effect of the increase in household savings on the equilibrium real interest rate. (d) Based on the change in the equilibrium real interest rate identified in part (c), what will happen to financial capital flows to the United States? e) Based on…Respond succinctly and precisely to each of the following scenarios. Hint: these are beginning with a currency value change; start from there, and do not consider what caused the change. (h) The European Union and Brazil are trade partners. Brazil's currency, the real, appreciates relative to the European Union's euro. Ceteris paribus, how will this change affect: Brazil's net exports? Explain. the capital and financial account of Brazil?
