The current exchange rate between Canadian dollar and British Pound is 1 Pound = 1.55 C$. If the C$ weakens by 1.25% relative to the British pound, how much will be C$ per British Pound
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Q2: The current exchange rate between Canadian dollar and British Pound is 1 Pound = 1.55 C$. If the C$ weakens by 1.25% relative to the British pound, how much will be C$ per British Pound? ___________.What is the percentage that British pound appreciates? ______________%. (Please pay attention to this %, if your answer is like 22.45%, you should input 22.45)
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- True/False and Explain An increase in savings implies a decrease in consumption and therefore a decrease in GDP. The exchange rate between two countries can be thought of as unrelated to any economic variables. If the real rate of return on investment is higher in the US than in Canada, capital will tend to flow out of the US and into Canada. When nominal interest rates are zero, the central bank can still lower them by printing money and purchasing bonds from banks. This increases the supply of loanable funds and stimulates lending. A pro-savings policy by the US would likely reduce the US trade deficit. When savings equals investment, reducing savings and increasing consumption is especially effective in stimulating output. In the dynamic AS-AD model, a perfectly inelastic aggregate supply curve means the central bank cannot control the rate of output growth or the inflation rate. 8. There are an infinite number of combinations of real interest rates and inflation rates…13. Assuming that all international parity conditions, i.e., CIRP, UIRP, PPP, and Fisher Effect, are being held true, what would become of the real exchange rate and real interest rates? Explain.Q3-4 Suppose that Canada decides to peg its dollar ($C or the loonie) to the US dollar at an exchange rate of $C1 =$US1. What will happen to Canadian interest rates as a result of the leftward shift in the US IS curve? Select one: a. They will rise. b. They will fall. c. They will not change. d. The IS curve will show an increase.
- 1. Which of the following correctly explains the potential disadvantage of a freely floating exchange rate regime? A freely floating exchange rate may compound a country’s inflationary problem. It is because if a country experiences high levels of inflation, its currency may weaken. A weaker currency can cause import prices to rise, which can increase the prices of materials and supplies and subsequently the price of the finished goods, compounding the country’s inflationary problem. A freely floating exchange rate regime may adversely affect a country that has high unemployment. It is because if the unemployment rate is high, the demand for import will decrease, putting appreciation pressure on the home currency. A stronger home currency will cause domestic consumers to purchase foreign, rather than domestic products, because the foreign products are now cheaper. This reaction of domestic consumers can be detrimental to a country during periods of high unemployment. All the…Suppose that Nevada Co., a US MNC, sold consulting services to Primedia, a company based in Belarus, for 750 rubles. At the time of the transaction, the prevailing exchange rate was $0.45. If Nevada Co's bank does not desire to hold such a large amount of rubles, which of the following exchange rates might they be willing to accept when Nevada Co. seeks to exchange the rubles for dollars? A. $0.54 B. $0.43 C. $0.47 D. $0.50Suppose the Australian dollar floats against the US dollar and the demand for Australian dollars in the foreign exchange market is given by Q = 125 - 50E where Q denotes the quantity of AUD and E denotes the nominal exchange rate expressed in USD per AUD. The supply of Australian dollars is given by Q = 25 + 50E. What is the equilibrium nominal exchange rate? 0.751.250.501.00
- what was the approximate daily turnover in the foreign exchange market in 2014? -us $4 trillion per day -us 275 billion per day -us $ one trillion per month -us $2750 billion per daySuppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $901, and the exchange rate will be $1.28/£. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $817, and the exchange rate will be $1.43/£. You assess that the American economy will experience a boom with a 50 percent probability and a recession with the remaining probability.Estimate the expected value of the property in GBP (as XXX.XXX)Suppose that the current exchange rate is 1.50 = £1, but it is expected to be 1.35 = £1in one year. If the current interest rate on a one-year government bond in the United Kingdom is 4%, what does the interest-rate parity condition indicate the interest rate will be on a one-year government bond in Germany? Assume that there are no differences in risk, liquidity, taxation, or information costs between the bonds.
- 7) On may 1,2015 the yen/dollar and euro/dollar exchange rates were ¥120.15 and €0.8929, respectively. What is the euro/yen cross exchange rate?Based on the table provided, answer the following questions: Compute the U.S. dollar–yen exchange rate E$/¥ and the U.S. dollar–Canadian dollar exchange rate E$/C$ on January 20, 2016, and January 20, 2015. What happened to the value of the U.S. dollar relative to the Japanese yen and Canadian dollar between January 20, 2015, and January 20, 2016? Compute the percentage change in the value of the U.S. dollar relative to each currency using the U.S. dollar–foreign currency exchange rates you computed in (a). Using the information in the table for January 20, 2016, compute the Danish krone–Canadian dollar exchange rate Ekrone/C$.Give typing answer with explanation and conclusion Suppose that the current exchange rate is 1.48 euro = 1 pound, but it is expected to be 1.35 euro =1 pound in one year. If the current interest rate on a one-year government bond in the United Kingdom is 9 %, what does the interest-rate parity condition indicate the interest rate will be on a one-year government bond in Germany? Assume that there are no differences in risk, liquidity, taxation, or information costs between the bonds. The German interest rate will be ________ %. (Round your response to two decimal places.)
