EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 39, Problem 2DQ
To determine
The demand for and supply of Euros.
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The current exchange rate is £1.00 = $2.00. Compute the correct balances in Bank A's correspondent account(s) with Bank B if a currency trader employed at Bank A buys £45,000 from a currency trader at Bank B for $90,000 using its
correspondent relationship with Bank B:
O a. Bank A's pound-denominated account at B will rise by £45,000.
O b. Bank B's dollar-denominated account at A will fall by $90,000.
O c. Bank B's pound-denominated account at A will rise by £45,000.
O d. Bank A's dollar-denominated account at B will rise by $90,000.
6) Indicate whether each of the following creates a demand for or a supply of European euros in foreign exchange markets:
a. U.S. airline firm purchases several Airbus planes assembles in France
b. A German automobile firm decides to build an assembly plant in South Carolina
c. A U. S. college student decides to spend a year studying at the Sorbonne in Paris
d. An Italian manufacturer ships machinery from one Italian port to another on an Liberian freighter
e. It is widely expected that the euro will depreciate in the near future
7. Previously metals are used as trading purposes. Both gold and silver
are used as international means of payment and the exchange rates
among currencies are determined by either their gold or silver
contents. Suppose that the dollar was pegged to gold at S20 per
ounce, the Japanese yen is pegged to gold at 120,000 yen per ounce
and to silver at 8,000 yen per ounce of silver, and the Canadian
dollar is pegged to silver at S$5 per ounce of silver. What would the
exchange rate between the U.S. dollar and Canadian dollar be under
this system?
Chapter 39 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 39.1 - Prob. 1QQCh. 39.1 - Prob. 2QQCh. 39.1 - Prob. 3QQCh. 39.1 - Prob. 4QQCh. 39 - Prob. 1DQCh. 39 - Prob. 2DQCh. 39 - Prob. 3DQCh. 39 - Prob. 4DQCh. 39 - Prob. 5DQCh. 39 - Prob. 6DQ
Ch. 39 - Prob. 7DQCh. 39 - Prob. 8DQCh. 39 - Prob. 9DQCh. 39 - Prob. 10DQCh. 39 - Prob. 11DQCh. 39 - Prob. 1RQCh. 39 - Prob. 2RQCh. 39 - Prob. 3RQCh. 39 - Prob. 4RQCh. 39 - Prob. 5RQCh. 39 - Prob. 6RQCh. 39 - Prob. 7RQCh. 39 - Prob. 8RQCh. 39 - Prob. 9RQCh. 39 - Prob. 10RQCh. 39 - Prob. 1PCh. 39 - Prob. 2PCh. 39 - Prob. 3PCh. 39 - Prob. 4PCh. 39 - Prob. 5P
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