Exploring Macroeconomics
8th Edition
ISBN: 9781544363332
Author: Robert L. Sexton
Publisher: Sage Publications
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Question
Chapter 21, Problem 6P
To determine
(a)
To explain:
The effect on the supply curve of dollars in the market of currency.
To determine
(b)
To explain:
The effect on the supply curve of dollars in the market of currency.
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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
If 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.
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- If 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_forwardTradavia exports its world-famous giant sausages to Gourmland. If the price of a sausage is 8 Tradavian dollars in the home currency and there are 6 Gourmlandian pounds to 1 dollar, what is the price of a sausage in Gourmland?arrow_forwardThe following graph depicts the supply schedule for euros. Hint: You can drag the black point (cross symbol) to various positions on the graph to see the values of the coordinates on the graph. You will not be graded for any changes you make to the graph. VALUE OF EURO (U.S. dollars per euro) 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 0 50 100 150 200 250 300 350 400 450 500 550 600 QUANTITY OF EUROS (Billions) At an exchange rate of 1.2 per euro, the quantity of euros supplied is of euros supplied is + ? billion euros, while at an exchange rate of 1.8 per euro, the quantity billion euros. This confirms that the supply schedule for euros is sloping.arrow_forward
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