Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 32, Problem 5QCMC
To determine
The impact of capital inflow on the exchange rate and interest rate.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
explain please The value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect ofthis change in the foreign exchange market?A. It will make Russia’s imports cheaper but may harm its export competitiveness.B. It will boost Russia’s exports, making them more competitive.C. It will have no impact on trade, as exchange rates do not influence international commerce.D. It will encourage capital outflows and discourage foreign investment.
What will happen to an economy when inflation remains constant, with high interest rates?a) Imports to decrease.b) Foreign investment in that country increase.c) The foreign trade deficit remains constant.d) The value of the dollar would depreciate relative to foreign currencies.
The value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect of this change in the foreign exchange market? A. It will make Russia's imports cheaper but may harm its export competitiveness. B. It will boost Russia's exports, making them more competitive. I c. It will have no impact on trade, as exchange rates do not influence international commerce. D. It will encourage capital outflows and discourage foreign investment.
Chapter 32 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Knowledge Booster
Similar questions
- A British pound cost 2.00 in U.S. dollars in 2008, but 1.27 in U.S. dollars in 2017. Was the pound weaker or stronger against the dollar? Did the dollar appreciate or depreciate versus the pound?arrow_forwardOne of Fiji's major trading partners is Australia. If Australia's GDP rises, the demand for Fiji's exports will _____, leading to a _____ shift in the demand for the Fijian dollar. a. rise; right b. rise; left c. fall; right d. fall; left Give the answer with detail explanation.arrow_forwardQ) Who benefits from the Euro appreciation against the Canadian dollar? a. A Canadian businessman planning to buy a home in Spain for his retirement b. A Canadian investor holding Italian treasure bonds c. A French manufacturer who exports goods to Canada d. A German man owning financial assets in Canada. Solve this with short explanationarrow_forward
- This summer has been very hot. In fact, many crops that need water to thrive have been suffering from dry conditions. Does poor weather, which reduces crop production, make the US dollar weaker or stronger?arrow_forward. Assume that the US economy expands and that the US Federal Reserve Bank, worried by rising inflation, decides to raise interest rates. Which of the following would not occur? A) The US dollar will appreciate. B) Interest rates in other countries will fall. C) The current account of the US's trading partners will improve. D) There will be a fall in US exports.arrow_forwardA civil war abroad causes foreign investors to movetheir funds to the safe haven of the United States,leading to _________U.S. interest rates and a_________ U.S. dollar.a. higher; weakerb. higher; strongerc. lower; weakerd. lower; strongerarrow_forward
- International Finance (chapter 21) 4 What factors will shift the supply and demand for currency?arrow_forward37. If the United States has a current account deficit with England of $1 million, and the Bank of England sells $1 million worth of pounds in the foreign exchange market, then England ________ $1 million of international reserves and its monetary base ________ by $1 million. Question 37 options: a) loses; falls b) gains; falls c) gains; rises d) loses; risesarrow_forwardCountry X, an open economy, has an increase in the demand for money which led to a significant increase in the real interest rates relative to the rest of the world.a. Explain how this increase in interest rates will affect each of the following for the Country X.i. Investment ii. The international value of its currency iii. Exportsarrow_forward
- Give typing answer with explanation and conclusion One of the contentious issues between the US and China is the competitive devaluation of the currency. The value of countries' currencies has a significant impact on the economy. The import of products with comparatively low prices encourages currency devaluation in countries. Using what has just been declared, define what devaluation means and which countries have suffered the worst devaluation against the dollar after the 2022 pandemic. Include some factors to support your position. PLEASE ADD SOURCES TOOarrow_forwardA strong euro is less favorable for: a) American tourists traveling in France. b) German tourists traveling abroad. c) Canadian firms selling in Germany. d) Canadian investors with money investments in Germany.arrow_forwardQuestion: "In a scenario where a country experiences a sudden and significant increase in its natural resource exports due to newly discovered resources, what is the most likely immediate effect on the country's currency in the foreign exchange market?" A) The currency will appreciate. B) The currency will depreciate. C) There will be no change in the currency value. D) The effect on the currency cannot be determined.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
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...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
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
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
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning