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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Chapter 11, Problem 3MC
To determine
Devaluation.
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explain please The value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect ofthis change in the foreign exchange market?A. It will make Russia’s imports cheaper but may harm its export competitiveness.B. It will boost Russia’s exports, making them more competitive.C. It will have no impact on trade, as exchange rates do not influence international commerce.D. It will encourage capital outflows and discourage foreign investment.
If U.S. securities pay 6 percent interest, and if Great Britain’s securities pay 8 percent interest, then
a.
pounds depreciate relative to dollars.
b.
pounds appreciate relative to dollars.
c.
Great Britain’s imports will fall.
d.
Great Britain’s exports will rise.
Suppose U.S. dollar appreciates versus the Euro. Then we should expect:
a. U.S. export to European Union rise
b. U.S. import from European Union decline
c. Both U.S. export and import decline
d. U.S. export to European Union decline
Chapter 11 Solutions
Managerial Economics: A Problem Solving Approach
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- A British pound cost 2.00 in U.S. dollars in 2008, but 1.27 in U.S. dollars in 2017. Was the pound weaker or stronger against the dollar? Did the dollar appreciate or depreciate versus the pound?arrow_forwardExplain the impacts on the Canadian dollar and it’s exchange rate done by the increase in export of Canadian goods.arrow_forwardIn 2011, Japan was hit by a powerful earthquake. Using the tools that you have learned from thiscourse, describe how the Japanese yen moves (depreciation or appreciation against Australian dollar)and why; and what Japanese central bank can do to handle this crisis and how it will affect Japanesemoney market and foreign exchange market; how the Japanese policy may affect Australianeconomyarrow_forward
- 9) Which of the following can lead to an increase in the demand for Japanese yen compared to the U.S. dollar? a) an increase in the relative price of Japanese-made goods b) an increase in the interest rate in Japan relative to the U.S. rate c) a decrease in the amount of yen bought by the U.S. government d) a decrease in the demand for goods made in Japan 10) Which of the following statements is NOT true? a) If a country's exports exceed its imports, then there is a trade surplus. b) If the balance of trade is positive, then the balance of payments is also positive. c) If a country's balance of trade is positive, then its exports exceed its imports. d) A country's balance of trade includes trade in both goods and services.arrow_forwardThe US and China are the two biggest economies of the world. Which of these situations will most likely increase the value of the US dollar as it trades with China? a. China’s GDP increases faster than US b. China’s exports increases sharply c. China imports more from the US than it exports to the US d. China exports more to the US than it imports from the USarrow_forwardIf foreigns investing in the United States (i.e. DI) is less than U.S. investors investing abroad (i.e. FI), ________. A. there is a financial account surplus B. the dollar is depreciating C. the dollar is appreciating D. the relative price of U.S. imports is increasing E. there is a financial account deficitarrow_forward
- when three is an increase in the value of the Europen Union's euro, all else equal, how will American businesses be affected? What will happen when there is a decrease in the value of the American dollar relative to the Japanese yen,given all else is equal?arrow_forwarda) A war suddenly breaks out abroad causing foreign investors to seek safe haven for their investments in the U.S. As a result, foreign capital rushes in to buy U.S. assets - U.S. stocks, bonds, real estates, factories and businesses. Illustrate the effect of this massive capital inflow to the U.S. dollar exchange rate using a supply and demand model. Label all curves and axes properly for full credit. Does this cause the U.S. dollar to depreciate or appreciate? b) Assume the U.S. exports finished products heavily to the world and imports raw materials heavily from the world. How will the change in the U.S. dollar exchange rate resulting from events in a) affect the U.S. real GDP and price level? Show the changes using an AD/AS model, ignoring the LRAS curve. Clearly justify in words the shift of each curve that shifts. Mark the initial equlibrium as A and the new equilibrium resulting from the the exchange rate change as B. What happens to the U.S. real GDP and the U.S. price level as…arrow_forwardThe value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect of this change in the foreign exchange market? A. It will make Russia's imports cheaper but may harm its export competitiveness. B. It will boost Russia's exports, making them more competitive. I c. It will have no impact on trade, as exchange rates do not influence international commerce. D. It will encourage capital outflows and discourage foreign investment.arrow_forward
- If the Chinese yuan devalues relative to the U.S. dollar, then Group of answer choices U.S. producers and Chinese consumers will benefit. U.S. producers will benefit and Chinese consumers will hurt. U.S. producers will be hurt and Chinese consumers will benefit. U.S. producers will be hurt and Chinese consumers will be hurt. U.S. consumers will be hurt and Chinese producers will be hurt.arrow_forwardA strong euro is less favorable for: a) American tourists traveling in France. b) German tourists traveling abroad. c) Canadian firms selling in Germany. d) Canadian investors with money investments in Germany.arrow_forwardAssume there has been an increase in the volume of exports from South Africa to the United States.a) 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. b) Explain which currency appreciated and which currency depreciated.arrow_forward
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