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The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose strong economic growth in Russia causes Russian incomes to increase, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER The increase in Russian incomes causes the Danish krone to v relative to the Russian ruble and causes the Russian ruble to v relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. RUBLES PRICE OF KRONER The increase in Russian incomes causes the Danish krone to relative to the Russian ruble and causes the Russian ruble to relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER Suppose the real interest rates in Russia and Denmark are initially the same. Then the real interest rate in Denmark rises, while the real interest rate in Russia remains the same. This will cause the supply of kroner to v and the demand for kroner to , which causes the Russian ruble to relative to the Danish krone. RUBLES PRICE OF KRONER

The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose strong economic growth in Russia causes Russian incomes to increase, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER The increase in Russian incomes causes the Danish krone to v relative to the Russian ruble and causes the Russian ruble to v relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. RUBLES PRICE OF KRONER The increase in Russian incomes causes the Danish krone to relative to the Russian ruble and causes the Russian ruble to relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER Suppose the real interest rates in Russia and Denmark are initially the same. Then the real interest rate in Denmark rises, while the real interest rate in Russia remains the same. This will cause the supply of kroner to v and the demand for kroner to , which causes the Russian ruble to relative to the Danish krone. RUBLES PRICE OF KRONER

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: A Macroeconomic Theory Of The Open Economy
Section: Chapter Questions
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The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone

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The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose strong economic growth in Russia causes Russian incomes to increase, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER The increase in Russian incomes causes the Danish krone to v relative to the Russian ruble and causes the Russian ruble to v relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. RUBLES PRICE OF KRONER
Transcribed Image Text:The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose strong economic growth in Russia causes Russian incomes to increase, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER The increase in Russian incomes causes the Danish krone to v relative to the Russian ruble and causes the Russian ruble to v relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. RUBLES PRICE OF KRONER
The increase in Russian incomes causes the Danish krone to relative to the Russian ruble and causes the Russian ruble to relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER Suppose the real interest rates in Russia and Denmark are initially the same. Then the real interest rate in Denmark rises, while the real interest rate in Russia remains the same. This will cause the supply of kroner to v and the demand for kroner to , which causes the Russian ruble to relative to the Danish krone. RUBLES PRICE OF KRONER
Transcribed Image Text:The increase in Russian incomes causes the Danish krone to relative to the Russian ruble and causes the Russian ruble to relative to the Danish krone. Suppose the price level in Russia rises by 5%, while the price level in Denmark remains the same. That is, the inflation rate in Russia is higher than in Denmark. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner. (?) Supply of Kroner Demand for Kroner Supply of Kroner Demand for Kroner QUANTITY OF KRONER Suppose the real interest rates in Russia and Denmark are initially the same. Then the real interest rate in Denmark rises, while the real interest rate in Russia remains the same. This will cause the supply of kroner to v and the demand for kroner to , which causes the Russian ruble to relative to the Danish krone. RUBLES PRICE OF KRONER
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