Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
8th Edition
ISBN: 9780134641843
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 34, Problem 8IAPA
To determine
Whether the interest rate parity holds between two countries.To determine the expected rate of appreciation or depreciation of the Brazilian real against the dollar.
If the Fed raised the interest rates, while the Brazilian interest rate remained the same,would there be an expected appreciation or depreciation in Real.
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The graph shows the supply curve of Canadian dollars.
Draw a new supply curve that shows the effect of a rise in the
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A change in the expected future exchange rate changes the supply of
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changes the supply of Canadian dollars
O A. today; today
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120
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Table 1: Exchange Rates September 2011
In US Dollars
2.00
1.33
.01
One US Dollar
British Pound
Euro
Japanese Yen
.50
.75
100
Table 2: Exchange Rates October 2011
In US Dollars
| 4.00
2.00
| .008
One US Dollar
British Pound
Euro
Japanese Yen
.25
.50
125
8. When you compare September and October 2011, which currency did the dollar
appreciate against?
9. When you compare September and October 2011, which currency did the dollar
depreciate against?
10. Which currencies appreciated against the dollar?
11. Which currency depreciated against the dollar?
12. As a result of the change in the dollar's exchange rate, which countries are more likely to
buy US goods
13. Which country is less likely to purchase US goods in the foreign market?
1 Suppose that two countries, Indonesia and Vietnam, produce coffee. The currency unit used in Indonesia is the Rupiah (IDR). The currency unit used in Vietnam is the Dong (VND). In Vietnam, coffee sells for 4,500 dong (VND) per pound. The exchange rate is 1.57 VND per 1 IDR, EVND/IDR = 1.57.
2 If the law of one price holds, what is the price of coffee in Indonesia, measured in Rupiah (assume we are talking about the same type of coffee)? Please round your answer to the nearest whole number.
Assume the price of coffee in Indonesia is actually 3000 IDR per pound. Compute the relative price of coffee in Indonesia versus Vietnam (round your answer to 2 decimal places). Where will coffee traders buy coffee? Where will they sell coffee in this case? How will these transactions affect the price of coffee in Vietnam? In Indonesia?
Chapter 34 Solutions
Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
Ch. 34 - Prob. 1SPPACh. 34 - Prob. 2SPPACh. 34 - Prob. 3SPPACh. 34 - Prob. 4SPPACh. 34 - Prob. 5SPPACh. 34 - Prob. 6SPPACh. 34 - Prob. 7SPPACh. 34 - Prob. 8SPPACh. 34 - Prob. 9SPPACh. 34 - Prob. 10SPPA
Ch. 34 - Prob. 1IAPACh. 34 - Prob. 2IAPACh. 34 - Prob. 3IAPACh. 34 - Prob. 4IAPACh. 34 - Prob. 5IAPACh. 34 - Prob. 6IAPACh. 34 - Prob. 7IAPACh. 34 - Prob. 8IAPACh. 34 - Prob. 1MCQCh. 34 - Prob. 2MCQCh. 34 - Prob. 3MCQCh. 34 - Prob. 4MCQCh. 34 - Prob. 5MCQCh. 34 - Prob. 6MCQCh. 34 - Prob. 7MCQCh. 34 - Prob. 8MCQ
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