Bundle: Exploring Macroeconomics, Loose-leaf Version, 7th + LMS Integrated MindTap Economics, 1 term (6 months) Printed Access Card
7th Edition
ISBN: 9781305784802
Author: Robert L. Sexton
Publisher: Cengage Learning
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Question
Chapter 21, Problem 10P
To determine
To classify:
The given items as credits or debits in the US balance of payment accounts.
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1. What is the exchange rate between the U.S. and Germany? Has there been appreciation or depreciation of the U.S. dollar relative to Germany's currency?
2. As a manager, how does this affect your decision to expand into Germany? Will it affect your costs or ability to produce in Germany?
3. Would you recommend your firm expand into Germany? If so, would you produce the product/service in Germany? Would you expand to sell the product/service to a new target market? If you don’t think your firm should expand into Germany, why?
Q1-18
In balance-of-payments accounting, the acquisition of a foreign production facility by a Canadian firm is a ________ item in Canada's balance of payments. The deposit of funds in a foreign bank account by a Canadian citizen is ________ item in Canada's balance of payments.
a. debit / a credit
b. debit / also a debit
c. credit / also a credit
d. credit / a debit
You own a local company. In the past year, you successfully expanded your sales market into Europe, and you now have profits and
cash denominated in euros. You want to convert the euros to your home country currency to repatriate the profits and pay taxes. You are
a. not required to convert the euros to the home currency to pay taxes.
b. a demander of the euro in the foreign exchange market.
c. a supplier of your home country's currency in the foreign exchange market.
d. a demander of your home country's currency in the foreign exchange market.
Chapter 21 Solutions
Bundle: Exploring Macroeconomics, Loose-leaf Version, 7th + LMS Integrated MindTap Economics, 1 term (6 months) Printed Access Card
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- Answer the followings: 1. A depreciation of the dollar on the foreign exchange market would result in: A) a decrease in the dollar prices paid by U.S. importers. B) foreign holidays for U.S. residents to be less expensive. C) a decrease in the demand for U.S. exports. D) an increase in the foreign currency prices paid for U.S. exports. 2. The exchange rate for one U.S. dollar is 1.2 Euros and 1.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 0.9 Euro and 1.7 British pounds. We can say: A) the dollar has depreciated relative to both British pounds and Euros. B) the dollar has appreciated relative to both British pounds and Euros. C) the dollar has appreciated relative to Euros and depreciated relative to British pounds. D) the dollar has appreciated relative to British pounds and depreciated relative to Euros. 3. The cost of a trip to New York, US, was $5000. Two weeks later, the US dollar appreciated against the British pound. If the price of the…arrow_forward19. In balance-of-payments accounting, the sale of a foreign production facility by a SA firm is a __________item in the SA balance of payments; the deposit of funds in a foreign bank account by a SA citizen__________ item in the SA balance of payments. A Debit; also is a debitB Debit; is a creditC Credit; is a debitD Credit; also is a creditarrow_forwardDescribe how each of the following transactions affects the U.S. Balance of Payments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.) (a) A French consumer imports American jeans and pays with a check drawn on a U.S. bank in Philadelphia. (b) An American company sells computer software to Costa Rica and receives a money order of $120,000. (c) A citizen from Italy enters the United States on an immigrant visa (that is, upon entering the United States she becomes a permanent resident of the United States). Her wealth in Italy is estimated to be about 1.5 billion U.S. dollars. (d) Frank Rogers, of Durham, buys 2,300.00 dollars of stocks from the German car maker BMW, from Citibank New York, paying with U.S. dollars. (e) An American company sells a subsidiary in the United States and with the proceeds buys a Romanian company. (f) The United States forgives debt of $3,200,000 to Canada. (g) An American family travels to…arrow_forward
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