Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 11, Problem 11.5IP
To determine
The effect of expectations on the exchange rate.
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Students have asked these similar questions
Increase in foreign income will _______ net export but depreciation of domestic currency will ________ net export.
Increase: Decrease
Increase: Increase
Decrease: Increase
Decrease: Decrease
Which of the followings cause the public to expect a depreciation of domestic currency?(There are more than one answer, NO partial credit).
Question 22 options:
An increase in productivity.
An increase in imports demand.
An increase in tariff.
An increase in export demand.
An increase in domestic price level.
Suppose the dollar depreciates relative to foreign currencies.
If U.S. firms have domestic content below 100%, the benefit to domestic firms is _____ (greater or less) than the benefit if U.S. producers had domestic content of 100%.
Chapter 11 Solutions
Managerial Economics: A Problem Solving Approach
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- Assume Turkish lira (TL) is expected to depreciate by 10% over the next year against US dollar. If the Turkish interest rate is15%, what would be the US interest rate that can make a Turkish investor to be willing to buy US securities today? Assume capital is perfectly mobile between Turkey and US.arrow_forwardDisplay graphically changes in the current value of domestic currency, if the domestic currency depreciation at a significant rate is expected.arrow_forwardOther things being equal, an increase in a country's interest rates will cause its currency to depreciate. True False If the U.S. dollar had a value equal to 1 euro a year ago and is now worth 1.2 euros, we say that the euro has appreciated over the past year. True Falsearrow_forward
- How should appreciation of a firm’s home country currency generally affect its cash inflows? How should depreciation of a firm’s home country currency generally affect its cash outflows?arrow_forwardWhen the United States dollar depreciates, which of the following parties will suffer? Group of answer choices Australian firms selling in the U.S. countries importing from the U.S. Australian firms selling in Japan U.S firms selling in Europearrow_forwardWhich of the following companies would gain from foreign currency depreciation? a. Companies that export goods and services. b. Companies that buy bonds issued by the foreign government. c. Companies that borrow in foreign currency. d. Companies that invest in the foreign equity markets.arrow_forward
- Based on the latest statistics published by Bank Negara Malaysia, Ringgit Malaysia has depreciated by 4.9% against US dollar during the first quarter of year 2020. Explain how the currency depreciation will affect export, import and the balance of trade of the country.arrow_forwardA rise in interest rates is expected to lead to an appreciation of the currency, and a drop in interest rates is expected to lead to a depreciation. True Falsearrow_forwardwhich of the following cause a depreciation of domestic currency in the long run? (There are more than one answer) An increase in domestic price level An increase in productivity An increase in imports demand An increase in tariff An increase in export demandarrow_forward
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