International Economics
16th Edition
ISBN: 9781305887633
Author: Robert Carbaugh
Publisher: Cengage Learning
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Byron converted $1,000 to ¥105,000 for a trip to Japan. However, he spent only ¥50,000. During this period, the value of the dollar weakened against the yen. Using a current exchange rate of $1 = ¥100, how many dollars does Byron have left?
The Simpson Group converts $1,000,000 into euros when the exchange rate is $1 = €0.75. After three months, the company converts this back into dollars when the exchange rate is $1 = €0.80. What is the outcome of this transaction?
There Today, a U.S. shipping company, imports industrial packaging from Japan. The company must pay in yen to the Japanese supplier within 30 days. In a particular exchange, the company must pay the Japanese supplier ¥150,000 for each set of industrial packaging at the current dollar/yen spot exchange rate of $1 = ¥110. There Today intends to resell the packaging the day they arrive for $1,600 each but it does not have the funds to pay the Japanese supplier until these have been sold. What will happen if the…
The supply of dollars in the foreign exchange market is likely to be upward sloping because as the price of a dollar (the exchange rate) rises ___________________________________.
Group of answer choices
A) foreigners demand more American goods because these goods have become less expensive to foreign consumers
B) foreigners demand fewer non-American goods because these goods have become more expensive to foreign consumers
C) Americans demand fewer foreign goods because these goods have become more expensive to American consumers
D) Americans demand more foreign goods because these goods have become less expensive to American consumers
Suppose that at some point the spot exchange rate is equal to 100 yen per one U.S. dollar, while the interest rate in dollars is 6% and the interest rate in yen is 1%. What is the approximate forward rate that is consistent with this situation?
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Similar questions
- Draw a correctly labeled graph of the foreign exchange market for dollars between US and Japan. Show what happens if capital flows from Japan to the US decrease due to a change in the preferences in Japanese investors.arrow_forwardAccording to the interest parity condition, if the U.S. interest rate is 2 percent and the Japanese interest rate is 4%, and the current exchange rate is 100 yens per dollar. Then the market expects the future exchange rate to be ________ yens per dollar. Question 12 options:arrow_forwardBalance of payments accounting. For the following international transactions, identify the balance of payments accounts and whether the transaction would generate an inflow or an outflow of foreign exchange for the two countries involved. ■ TIAA-CREF—the pension fund of American college professors—purchases 1 million shares of South Africa’s Standard Bank for $16 million. ■ Air France purchases $2.5 million of jet fuel at Boston’s Logan Airport. Payment is made directly from Air France’s bank account with State Street in Boston. ■ Hong Kong–based Cathay Pacific pays a $25 million annual lease on two Boeing 777s to U.S.-based lessor GE Capital.arrow_forward
- Contrast floating exchange rates, a soft peg, hard peg, and merged currency as options that a country’s economy has in terms of managing its exchange rate relative to the rest of the world. For each, give a benefit as well as a drawback.arrow_forwardBalance of payments accounting. For the following international transactions, identify the balance of payments accounts and whether the transaction would generate an inflow or an outflow of foreign exchange for the two countries involved. ■ U.S.-based General Electric (GE) sells 25 air turbines to Airbus-France for the total sum of $500 million. ■ U.S.-based Goldman Sachs advises the French government for the partial privatization of state-owned utility Gaz de France for a lump sum of $10 million. ■ American Airlines purchases five propeller aircrafts from Canada-based Bombardier for the total amount of $75 million. ■ TIAA-CREF—the pension fund of American college professors—purchases 1 million shares of South Africa’s Standard Bank for $16 million. ■ Air France purchases $2.5 million of jet fuel at Boston’s Logan Airport. Payment is made directly from Air France’s bank account with State Street in Boston. ■ Hong Kong–based Cathay Pacific pays a $25 million annual lease on two Boeing…arrow_forward
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