MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
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Question
Chapter 21.1, Problem 1QQ
To determine
Exchange rate.
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There is trade between the U.S. (domestic country) and Great Britain (foreign country) and the quantity of pounds supplied is positively related to the exchange rate. The exchange rate is defined as the domestic currency price of the foreign currency, i.e., dollars per pound. Using clearly labeled graphs of demand for and supply of the foreign currency, show and explain what will happen to: (i) the demand for pounds and/or; (ii) the supply of pounds; and (iii) the value of the dollar against the pound as a result of each one of the following changes. (a) a decrease in tariffs in the Great Britain. (b) a decrease in prices of goods produced in China. Both the U.S. and Great Britain trade with China. (c) a decrease in interest rates in the U.S
When the relative price of a country’s goods is high, then over time the relative price tends to_____ and the country’s currency _______.
a. rise, appreciates
b. rise, depreciates
c. fall, appreciates
d. fall, depreciates
A temporary increase in transportation costs between the US and the UK that cause the relative price of US goods to jump, will cause international investors to expect a future ______of the dollar that causes US real interest to _______those in the UK.
a. appreciation, exceed
b. appreciation, be less than
c. depreciation, exceed
d. depreciation, be less than
Q.1.1 Assume there has been an increase in the volume of exports from South Africato the United States.Q.1.1.1 Explain, with the use of a graph, the impact this had on thedemand and supply of dollars and the exchange rate in SouthAfrica.Q.1.1.2 Explain which currency appreciated and which currencydepreciated.
Chapter 21 Solutions
MACROECONOMICS (LL)
Ch. 21.1 - Prob. 1QQCh. 21.1 - Prob. 2QQCh. 21.1 - Prob. 3QQCh. 21.1 - Prob. 4QQCh. 21.A - Prob. 1ADQCh. 21.A - Prob. 1ARQCh. 21.A - Prob. 1APCh. 21 - Prob. 1DQCh. 21 - Prob. 2DQCh. 21 - Prob. 3DQ
Ch. 21 - Prob. 4DQCh. 21 - Prob. 5DQCh. 21 - Prob. 6DQCh. 21 - Prob. 7DQCh. 21 - Prob. 8DQCh. 21 - Prob. 9DQCh. 21 - Prob. 10DQCh. 21 - Prob. 11DQCh. 21 - Prob. 1RQCh. 21 - Prob. 2RQCh. 21 - Prob. 3RQCh. 21 - Prob. 4RQCh. 21 - Prob. 5RQCh. 21 - Prob. 6RQCh. 21 - Prob. 7RQCh. 21 - Prob. 8RQCh. 21 - Prob. 9RQCh. 21 - Prob. 10RQCh. 21 - Prob. 1PCh. 21 - Prob. 2PCh. 21 - Prob. 3PCh. 21 - Prob. 4PCh. 21 - Prob. 5P
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