Microeconomics A Contemporary Intro
10th Edition
ISBN: 9781285635101
Author: MCEACHERN
Publisher: Cengage
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Students have asked these similar questions
a. If the exchange rate changes from $1.70 per British pound (₤1) to $1.68 per ₤1, has the pound (₤) appreciated or depreciated? Has the dollar appreciated or depreciated?
b. What happens to the ₤-price that British residents pay for a $500 U.S. export good due to the exchange rate change above?
c. What happens to the $-price that U.S. residents pay for a ₤1200 import good from Britain?
d. How do these changes affect the economic welfare of U.S. exporters and U.S. importers?
2. a. If the exchange rate changes from $1.70 per British pound (₤1) to $1.72 per ₤1, has the pound (₤) appreciated or depreciated? Has the dollar appreciated or depreciated?
b. What happens to the ₤-price that British residents pay for a $500 U.S. export good due to the exchange rate change above?
c. What happens to the $-price that U.S. residents pay for a ₤1200…
Suppose that the exchange rate falls from 84 yen per U.S. dollar to 71 yen per U.S. dollar.
What is the effect of this change on the quantity of U.S. dollars that people plan to sell in the foreign exchange market?
The quantity of U.S. dollars that people plan to sell in the foreign exchange market
A. decreases and the supply curve of U.S. dollars shifts leftward
B. increases and the supply curve of U.S. dollars shifts rightward
C. increases and a movement up along the supply curve for U.S. dollars occurs
D. decreases and a movement down along the supply curve of U.S. dollars occurs
The graph shows the demand curve for U.S. dollars.
Draw a new demand curve that shows the effect of an increase in the
world demand for U.S. exports. Label it.
A change in the expected future exchange rate changes the demand for U.S.
dollars and a change in the world demand for U.S. exports changes the
demand for U.S. dollars
A. today; in the future
B. in the future; today
C. in the future; in the future
D. today; today
160
140-
120-
100-
80-
60-
40+
Exchange rate (yen per U.S. dollar)
Do
1.3
1.5
1.6
1.7
1.4
Quantity (trillions of U.S. dollars per day)
>>> Draw only the objects specified in the question.
1.8
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Similar questions
- Suppose there is a country “A", the currency of A is "X". Suppose that for some reason, the world's import demand for country A's products increases. Please use use the chart to analyze how the exchange rate of X moves to the long-term equilibrium.arrow_forwardIf there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.arrow_forwardIf there is a decrease in the desire of Americans to purchase goods and services from other countries and put money in foreign banks and businesses then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would increase and the US dollar would appreciate. B. The equilibrium quantity of foreign currency would decrease and the US dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the US dollar would depreciate.arrow_forward
- How does a fall in the exchange rate cause an increase in the cost of raw imported materials?arrow_forwardThe supply of U.S. dollars on foreign exchange markets is A. derived from the supply of U.S. goods. B. determined directly by open market operations at the Federal Reserve Bank. C. derived from the demand for U.S. products by foreigners. D. derived from the demand by United States for imported goods and services.arrow_forwardOther things the same, if the exchange rate changes from .8 euros per dollar to .9 euros per dollar, what happen to U.S. dollar and U.S. goods?arrow_forward
- (1) a. If the exchange rate changes from $1.70 per British pound (₤1) to $1.72 per ₤1, has the pound (₤) appreciated or depreciated? Has the dollar appreciated or depreciated? b. What happens to the ₤-price that British residents pay for a $500 U.S. export good due to the exchange rate change above? c. What happens to the $-price that U.S. residents pay for a ₤1200 import good from Britain? d. How do these changes affect the economic welfare of U.S. exporters and U.S. importers? (2) Suppose that the euro (€) appreciates from $1.00 per €1 to $1.20 per €1. Determine whether the underlined individuals listed below would see that appreciation as a good or a bad thing. a. A U.S. business buys €10,000 of chemicals from a German company. b. An Italian clothing company buys $100,000 of leather from a U.S. leather maker. c. A U.S. resident has a retirement account totaling €500,000 in a German bank. d. A U.S. company must make an interest payment of €25,000 to the French bank from which it…arrow_forwardThe supply of U.S. dollars on foreign exchange markets is a. derived from the supply of U.S. goods. b. derived from the demand by United States for imported goods and services. c. determined directly by open market operations at the Federal Reserve Bank. d. derived from the demand for U.S. products by foreigners.arrow_forwardOther things the same, if the U.S. price level falls, then the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises. the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls. the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises. the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls.arrow_forward
- If in a country the tariff rates rises and at the same time the personal income tax rates in the country falls, what happens to the exchange rates? sketch a graph and explain pleasearrow_forwardSuppose a country imposes a tariff on imports from abroad. a. How does this action affect the country’s imports of foreign goods? b. How does this action affect the world relative demand for foreign goods and the relative demand for home goods? c. How does this action change the long-run real exchange rate between the home and foreign currencies? d. How is the long-run nominal exchange rate affected?arrow_forwardA case study in the chapter analyzed purchasing-power parity for several countries using the price of Big Macs. Here are data for a few more countries: For each country, select the predicted exchange rate of the local currency per U.S. dollar. (Hint: Recall that the U.S. price of a Big Mac was $4.93.) Price of a Big Mac Predicted Exchange Rate Actual Exchange Rate Country Chile 2,100 pesos 715 pesos/$ 900 forints 293 forints/$ 75 korunas 25.1 korunas/$ 13.5 real 4.02 real/$ 5.84 C$ 1.41 C$/$ Hungary Czech Republic Brazil Canada According to purchasing-power parity, the predicted exchange rate between the Hungarian forint and the Canadian dollar is dollar. However, the actual exchange rate is forints per Canadian dollar. forints per Canadianarrow_forward
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