MICROECONOMICS - CONNECT ACCESS
21st Edition
ISBN: 9781264197071
Author: McConnell
Publisher: MCG
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Chapter 27.1, Problem 4QQ
To determine
Equilibrium exchange rate.
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Suppose that the U.S. dollar-Chinese yuan exchange rate is fixed by the U.S. and Chinese governments. Assume also that labor is immobile between the United States and China due to high transportation costs.
Which of the following situations is likely to occur if there is a simultaneous increase in the demand for U.S. goods and a decrease in the demand for Chinese goods?
a) The Chinese unemployment rate will increase, and the country will undergo hard economic times for a sustained period.
b) The U.S. unemployment rate will increase, and the country will undergo hard economic times for a sustained period.
c) The Chinese unemployment rate will initially rise but then drop as the Chinese yuan depreciates against the U.S. dollar.
d) The Chinese unemployment rate will initially rise but soon drop as unemployed Chinese move to the United States for employment.
True or False? “U.S. exports create a demand for foreign currencies; foreign imports of U.S. goods create a supply of foreign currencies.” Explain. Would a decline in U.S. consumer income or a weakening of U.S. preferences for foreign products cause the dollar to depreciate or to appreciate? Other things equal, what would be the effects of that depreciation or appreciation on U.S. exports and imports?
5. When the official dollar price of a
foreign currency is set below its equilibrium level, the dollar
a. is undervalued.
b. is devalued.
C. has been appreciated.
d. is overvalued.
e. is revalued.
Thanks
Chapter 27 Solutions
MICROECONOMICS - CONNECT ACCESS
Ch. 27.1 - Prob. 1QQCh. 27.1 - Prob. 2QQCh. 27.1 - Prob. 3QQCh. 27.1 - Prob. 4QQCh. 27.A - Prob. 1ADQCh. 27.A - Prob. 1ARQCh. 27.A - Prob. 1APCh. 27 - Prob. 1DQCh. 27 - Prob. 2DQCh. 27 - Prob. 3DQ
Ch. 27 - Prob. 4DQCh. 27 - Prob. 5DQCh. 27 - Prob. 6DQCh. 27 - Prob. 7DQCh. 27 - Prob. 8DQCh. 27 - Prob. 9DQCh. 27 - Prob. 10DQCh. 27 - Prob. 11DQCh. 27 - Prob. 1RQCh. 27 - Prob. 2RQCh. 27 - Prob. 3RQCh. 27 - Prob. 4RQCh. 27 - Prob. 5RQCh. 27 - Prob. 6RQCh. 27 - Prob. 7RQCh. 27 - Prob. 8RQCh. 27 - Prob. 9RQCh. 27 - Prob. 10RQCh. 27 - Prob. 1PCh. 27 - Prob. 2PCh. 27 - Prob. 3PCh. 27 - Prob. 4PCh. 27 - Prob. 5P
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