MACROECONOMICS (LL)
MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
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Chapter 21, Problem 2DQ
To determine

The demand for and supply of Euros.

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8. Suppose that last year, the nominal exchange rate between the Japanese yen and the British pound was ¥150.0 per £1.0, one unit of Japanese output cost ¥1300, and one unit of British output cost £8.0.a. What was the real exchange rate between the U.K. and Japan last year, expressed as the cost of British output (i.e. – the quantity of Japanese output that exchanges for 1 unit of British output)? In which country were goods more expensive last year?
Advanced Analysis: Refer to the following table, in which Qd is the quantity of loonies demanded, P is the dollar price of loonies, Qs is the quantity of loonies supplied in year 1, and Qs' is the quantity of loonies supplied in year 2. All quantities are in billions. Further, assume that the exchange rate is fixed at 110.   Qd P Qs Qs' 10 125 30 20 15 120 25 15 20 115 20 10 25 110 15 5   Instructions: Enter your answers as whole numbers.   a. In year 1, what would be the minimum initial size of the U.S. reserve of loonies such that it could maintain the peg throughout the year?         billion loonies     b. What about the minimum initial size that would be necessary at the start of year 2?         billion loonies          Next, consider only the data for year 1.   c. What peg should the United States set if it wants the fixed exchange rate to increase the domestic money supply by $1.2 trillion?         dollars per loonie
1 .Refer to the following table in which Qd is the quantity of yen demanded, P is the dollar price of yen, Qs is the quantity of yen supplied in year 1, and Qs ' is the quantity of yen supplied in year 2. All quantities are in billions and the dollar-yen exchange rate is fully flexible.  Qd P Qs Qs' 160 145 480 320 240 140 400 240 320 135 320 160 400 130 240 80 a. What is the equilibrium dollar price of yen in year 1? b. What is the equilibrium dollar price of yen in year 2?    2. The following are production possibilities tables for China and the United States.  Assume that before specialization and trade the optimal product-mix for China is alternative B and for the United States alternative U.                                                  Production Possibilities: China Product A B C D E F Apparel 150,000 120,000 90,000 60,000 30,000 0 Chemicals (in Tons) 0 30 60 90 120 150                                                    Production Possibilities:…
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