Which of the variables in the Equation of Exchange (MVPQ) is the one that matters because it is the only one that is real? a) M b) V c) P d) Q
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Which of the variables in the Equation of Exchange (MVPQ) is the one that matters because it is the only one that is real?
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a) M |
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b) V |
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c) P |
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d) Q |
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- With reference to the euro/sterling exchange rate, explain two factors in the UK economy which may lead to an appreciation of sterling.Given that price level of Singapore is 105, the price level of New Zealand is 125 and the real exchange rate Q(NZD/SGD) = 1.2000, what is S(NZD/SGD)? Choose the answer that is closest to your calculation. a. 0.9921 b. 0.7000 c. 1.0080 d. 1.4286Explain to the citizens of your country the situations that surround the balance of payment in an economy.
- Suppose the exchange rate between the Mexican peso and the U.S. dollar is 12 MXN = $1 and the exchange rate between the Hungarian forint and the U.S. dollar is 215 FNT = $1.a. Express both of these exchange rates in terms of dollars per unit of the foreign currency.b. What should the exchange rate be between the Mexican peso and the Hungarian forint?In Belarus, the government doesn’t allow trading of its ruble outside a narrow price range, which greatly overvalues the ruble – there is a price floor on the ruble compared to euros or dollars. Because of the floor, currency trading has dried up – who would want to sell foreign currencies for grossly overpriced Belarusian rubles? A friend of one of my students has a web site designed to overcome rigidities in this market, a sort of Craigslist for currency. People specify amounts they are willing to buy or sell, agree to trade at some price and arrange a meeting place. When they meet, the trade nominally occurs at the official price floor, making the transaction nominally legal; but the person selling rubles makes extra payments to the buyer to lower the price sufficiently so that the trade actually takes place at the equilibrium price. This is one more way in which technology helps markets circumvent imperfections and rigidities. Q: If the Belarusian government increases…Suppose the implied exchange rate between euro and USD is $1.17 per euro based on PPP and the Hamburger standard. The actual exchange rate is $1.22. Therefore, euro is misvalued by ______%.
- Identify two factors that may be contributing to exchange rate volatility during the last 12 months? If you were an economic advisor for the business organisation, what advice would you give so as to mitigate the risks associated with exchange rate volatility over the next 12 month? Substaintiate your answer.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 a computer sells for US$1,200 in the U.S. and for £855 in London. If the exchange rate is £0.65 per dollar, is there any arbitrage (profit opportunity)? Explain
- Question Three Distinguish between the short run and long run determinants of exchange rate volatility. In your assessment show how the exchange rate movements can influence the Interest Parity Condition. . Consider that a basket of goods in Johannesburg is worth ZAR 5000 (5000 rands) while the same basket of goods is worth K7500 (7500 kwacha) in Zambia. A check for the displayed exchange rates at one of the FnB branches in Lusaka revealed that ZAR1 (1 rand) can be exchanged for K1.16. Based on the foregoing establish the nominal exchange rate and the real exchange rate between the kwacha and the rand. Comment on your estimates in the face of international trade between Zambia and South AfricaThe nominal exchange rate: Answer a. Is the amount of one country's goods that could be obtained with the same goods of another country b. Is a synonymous term for the swap rate c. Is the rate that one can exchange the currency of one country for the currency of another country d. Is always expressed as units of a foreign currency per U.S. dollarAssume there has been an increase in the volume of exports from South Africa to the United States.Q.1.1.1 Explain, with the use of a graph, the impact this had on the demand and supply of dollars and the exchange rate in South Africa.
