Economics, Student Value Edition (7th Edition)
7th Edition
ISBN: 9780134739229
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 29, Problem 29.3RDE
Subpart (a):
To determine
The long-term trend of the exchange value of dollar and effect on the changes in exchange.
Subpart (b):
To determine
What happened to the exchange value of dollar in Oct 2014-2015.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Image uploaded answer is strictly not allowed
On June 23, 2016, citizens of the United Kingdom voted in favor of a referendum to leave the European Union. The table below shows
the exchange rate between the U.S. dollar and the British pound 4 months before and 4 months after the vote. Complete the table,
giving all answers to three decimals.
Date
February 23, 2016
June 23, 2016
October, 23, 2016
Exchange Rates Between the U.S. Dollar and the British Pound
Units of foreign currency you can Number of U.S. dollars required to buy one
buy with 1 U.S. dollar
unit of the foreign currency
0.713
0.671
1.22
Suppose that the exchange rate between Great British pound and U.S. dollar is 0.78 pounds/dollar. The price index in the United States is 264 and the price index in Britain is 277. What is the real exchange rate between pounds and dollars?
Chapter 29 Solutions
Economics, Student Value Edition (7th Edition)
Ch. 29 - Prob. 29.1.1RQCh. 29 - Prob. 29.1.2RQCh. 29 - Prob. 29.1.3RQCh. 29 - Prob. 29.1.4PACh. 29 - Prob. 29.1.5PACh. 29 - Prob. 29.1.6PACh. 29 - Prob. 29.1.7PACh. 29 - Prob. 29.1.8PACh. 29 - Prob. 29.1.9PACh. 29 - Prob. 29.1.10PA
Ch. 29 - Prob. 29.1.11PACh. 29 - Prob. 29.2.1RQCh. 29 - Prob. 29.2.2RQCh. 29 - Prob. 29.2.3RQCh. 29 - Prob. 29.2.4RQCh. 29 - Prob. 29.2.5PACh. 29 - Prob. 29.2.6PACh. 29 - Prob. 29.2.7PACh. 29 - Prob. 29.2.8PACh. 29 - Prob. 29.2.9PACh. 29 - Prob. 29.2.11PACh. 29 - Prob. 29.2.12PACh. 29 - Prob. 29.2.13PACh. 29 - Prob. 29.2.14PACh. 29 - Prob. 29.3.1RQCh. 29 - Prob. 29.3.2RQCh. 29 - Prob. 29.3.3RQCh. 29 - Prob. 29.3.4PACh. 29 - Prob. 29.3.5PACh. 29 - Prob. 29.3.6PACh. 29 - Prob. 29.3.7PACh. 29 - Prob. 29.3.9PACh. 29 - Prob. 29.3.10PACh. 29 - Prob. 29.4.2RQCh. 29 - Prob. 29.4.5PACh. 29 - Prob. 29.4.6PACh. 29 - Prob. 29.4.7PACh. 29 - Prob. 29.4.8PACh. 29 - Prob. 29.5.1RQCh. 29 - Prob. 29.5.2RQCh. 29 - Prob. 29.5.3RQCh. 29 - Prob. 29.5.4PACh. 29 - Prob. 29.5.5PACh. 29 - Prob. 29.5.6PACh. 29 - Prob. 29.5.7PACh. 29 - Prob. 29.1RDECh. 29 - Prob. 29.2RDECh. 29 - Prob. 29.3RDECh. 29 - Prob. 29.4RDECh. 29 - Prob. 29.5RDECh. 29 - Prob. 29.1CTE
Knowledge Booster
Similar questions
- Euro area Norway United Kingdom Poland China Local Price: (Foreign currency) 4.08 42.00 3.29 10.80 21.00 Actual Exchange Rate (Dollars per unit of foreign currency) 1.12 0.12 1.25 0.26 0.14 PPP Exchange Rate (U.S. Dollars per British pound) Source: "The Big Mac Index, Our Interactive Currency Comparison Tool, The Economist, last modified January 10, 2019, accessed September 27, 2019, https://www.economist.com/news/2019/07/10/the-big-mac-index. - Dollar Price (Dollars) Purchasing-power parity (PPP) theory states that exchange rates would need to equalize the prices of goods in any two countries. For the dollar price of a Big Mac to be the same in both countries, a U.S. citizen would need to be able to convert $5.74 into exactly GBP 3.29. To find the exchange rate at which hamburger purchasing power is the same in both countries, divide the price in the United States by price in the United Kingdom: $5.76 GBP 3.29 $1.74 per pound 4.11 2.81 2.94 4.57 5.04 Exporting Big Macs from the Euro…arrow_forward1- In Myanmar to fix the exchange rate at 1 US$ = 5 Kyat, the government has imposed law stated that for people who buy and sell US dollars at any exchange rate that is different from this rate will be imprisoned in jail for 10 years. However, 3 months later, after the failure of the implementation, the government revoked and gave up the law and let the exchange rate floated at market rate of 1 US$ = 1,320 Kyat. Using the concept about "US dollar reserves at Myanmar central bank" and "US dollar black market", explain the reasons leading to failure of this law!arrow_forwardAnswer last two questionsarrow_forward
- 4) Suppose the price level in India is 9,500, the price level in the United States is 140, and the price level in Brazil is 750. Suppose the current nominal exchange rates are 75 Indian rupee per dollar and 5 Brazilian real per dollar. Calculate the real exchange rates (rounded to two decimal places) between each pair of countries. Note that you will have to first calculate the nominal exchange rate between Brazil and South India before calculating the real exchange rate between those two countries. (4arrow_forwardeBook Print References Consider the data in the table below: Nominal Exchange Rates for the U.S. Dollar yen Foreign currency/0.5. U.S. dollars/foreign Country United Kingdom (pound) Canada (Canadian dollar) Mexico (peso) Japan (yen) European Union (euro) a. Calculate the nominal exchange rate between the Mexican peso and the Japanese yen. Express in two ways. Instructions: Enter your responses rounded to three decimal places. One peso = peso dollar 0.612 0.968 11.654 81.126 0.698 peso. currency 1.633 One yen b. Suppose the peso appreciates by 20 percent against the dollar while the value of the yen against the dollar remains unchanged. Instructions: Enter your responses rounded to three decimal places. One peso yen One yen 1.033 0.086 0.012 1.433arrow_forward8arrow_forward
- A currency depreciates if it buys less of a foreign currency than it did before. The US dollar depreciated against what currency(a) from month 1 to month 2? Explain using the chartarrow_forward21. What does Foreign Exchange mean? Why do we see currency fluctuations?arrow_forwardNote: Round your answers to the nearest cent. Big Mac Index: January 2019 Local Price Actual Exchange Rate Dollar Price (Foreign currency) (Dollars per unit of foreign currency) (Dollars) Euro area 4.08 1.12 Switzerland 6.50 1.01 United Kingdom 3.29 1.25 4.11 Poland 10.80 0.26 2.81 China 21.00 0.14 2.94 Source: "The Big Mac Index, Our Interactive Currency Comparison Tool," The Economist, last modified January 10, 2019, accessed September 27, 2019, https://www.economist.com/news/2019/07/10/the-big-mac-index. Purchasing-power parity (PPP) theory states that exchange rates would need to equalize the prices of goods in any two countries. For the dollar price of a Big Mac to be the same in both countries, a U.S. citizen would need to be able to convert $5.74 into exactly GBP 3.29. To find the exchange rate at which hamburger purchasing power is the same in both countries, divide the price in the United States by the price in the United Kingdom: PPP Exchange Rate (U.S. Dollars per British…arrow_forward
- 8. Purchasing-power parity Using data from The Economist's Big Mac Index for 2019, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $5.74 in the United States and GBP 3.29 in the United Kingdom. The actual exchange rate between the British pound and the U.S. dollar was $1.25 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows: Dollar price of a Big Mac in the United Kingdom = GBP 3.29 x = $4.11 For the price you paid for a Big Mac in the United States, you could have purchased a Big Mac in the United Kingdom and had some change left over for fries! Complete the final column of the table by computing the dollar price of a Big Mac for the countries where this amount is not given. Note: Round your answers to the nearest cent. Euro area Switzerland United…arrow_forward8. Purchasing-power parity Using data from The Economist's Big Mac Index for 2019, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $5.74 in the United States and GBP 3.29 in the United Kingdom. The actual exchange rate between the British pound and the U.S. dollar was $1.25 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows: Dollar price of a Big Mac in the United Kingdom = GBP 3.29 X = $4.11 For the price you paid for a Big Mac in the United States, you could have purchased a Big Mac in the United Kingdom and had some change left over for fries! Complete the final column of the table by computing the dollar price of a Big Mac for the countries where this amount is not given. Note: Round your answers to the nearest cent. Brazil Switzerland United…arrow_forwardUsing data from The Economist's Big Mac Index for 2019, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $5.74 in the United States and GBP 3.29 in the United Kingdom. The actual exchange rate between the British pound and the U.S. dollar was $1.25 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows: Dollar price of a Big Mac in the United Kingdom = GBP 3.29 × = $4.11 For the price you paid for a Big Mac in the United States, you could have purchased a Big Mac in the United Kingdom and had some change left over for fries! Complete the final column of the table by computing the dollar price of a Big Mac for the countries where this amount is not given. Note: Round your answers to the nearest cent. Argentina Switzerland United Kingdom Poland China Local…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning