Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 9, Problem 27APA
To determine
Determine the private sector and the government sector balance.
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Would each of the following groups be happy or unhappy if the U.S. dollar depreciated? Explain.
(a) French pension funds holding U.S. government bonds.
(b) U.S. manufacturing industries.
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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 chart
Chapter 9 Solutions
Macroeconomics
Ch. 9.1 - Prob. 1RQCh. 9.1 - Prob. 2RQCh. 9.1 - Prob. 3RQCh. 9.1 - Prob. 4RQCh. 9.1 - Prob. 5RQCh. 9.1 - Prob. 6RQCh. 9.1 - Prob. 7RQCh. 9.2 - Prob. 1RQCh. 9.2 - Prob. 2RQCh. 9.2 - Prob. 3RQ
Ch. 9.2 - Prob. 4RQCh. 9.2 - Prob. 5RQCh. 9.2 - Prob. 6RQCh. 9.3 - Prob. 1RQCh. 9.3 - Prob. 2RQCh. 9.3 - Prob. 3RQCh. 9.3 - Prob. 4RQCh. 9.4 - Prob. 1RQCh. 9.4 - Prob. 2RQCh. 9.4 - Prob. 3RQCh. 9 - Prob. 1SPACh. 9 - Prob. 2SPACh. 9 - Prob. 3SPACh. 9 - Prob. 4SPACh. 9 - Prob. 5SPACh. 9 - Prob. 6SPACh. 9 - Prob. 7SPACh. 9 - Prob. 8SPACh. 9 - Prob. 9SPACh. 9 - Prob. 10SPACh. 9 - Prob. 11APACh. 9 - Prob. 12APACh. 9 - Prob. 13APACh. 9 - Prob. 14APACh. 9 - Prob. 15APACh. 9 - Prob. 16APACh. 9 - Prob. 17APACh. 9 - Prob. 18APACh. 9 - Prob. 19APACh. 9 - Prob. 20APACh. 9 - Prob. 21APACh. 9 - Prob. 22APACh. 9 - Prob. 23APACh. 9 - Prob. 24APACh. 9 - Prob. 25APACh. 9 - Prob. 26APACh. 9 - Prob. 27APACh. 9 - Prob. 28APACh. 9 - Prob. 29APA
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- What is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?arrow_forwardCan you answer the questions, please? I do not need an explanation, I need only a correct answer. 49) Which one of the following would appear as a debit item in the UK balance of payments?     A) Honda invests in a new factory in the UK. B) American tourists fly BA. C) A Japanese pension fund buys shares in a British oil company. D) Foreign tourists spend money in London. E) A British wine merchant purchases wine from Chile  50) Which of the following policies could a government or central bank pursue to prevent the exchange rate from depreciating?     A) Raise interest rates B) Increase the money supply through open-market operations C) Raise taxes D) Buy foreign currencies on the foreign exchange marketarrow_forwardEconomists sometimes say that the current exchange rate system is a dirty float system. What does this mean?arrow_forward
- The financial account balance of the Canadian balance of payments decreases in all of the following cases except one. Which? Please choose an answer: at. Decrease in international reserves held by the Bank of Canada; b. Increase in Canadian direct investment in Mexico. vs. Increase in foreign bonds held by Canadians; d. Decrease in American direct investment in Canada; e. Decrease in Canadian bonds held by non-residents of Canada;arrow_forwardWhen Great Britain voted to leave the eurozone, the pound depreciated 17% against the dollar. It also raised fears that the eurozone, which uses the euro as a common currency, would fall apart. Suppose that the dollar is considered safer than the euro, given these conditions. The following graph shows the market for dollars, with the quantity of dollars measured along the horizontal axis and the price of dollars in terms of euros measured along the vertical axis (in other words, the euro/dollar exchange rate).arrow_forwardWhat are the three categories of transactions in the balance of payments? Give an example of each.arrow_forward
- Central Banks are responsible for setting interest rates not the value of the domestic currency. The Bank of Canada doesn’t try to set the dollar’s exchange rate. "We let markets set its value. Because the Bank of Canada lets the Canadian dollar float, we can focus on setting interest rates to maintain inflation at 2 percent in Canada" https://www.bankofcanada.ca/2020/08/understanding-exchange-rates/Read the above explainer from the Bank of Canada and then offer your own understanding of why the Canadian dollar moves against other currencies. Use recent movements in the C$ against the US$ to illustrate your comments.arrow_forwardwhere a country which currently uses a fixed exchange rate regime; If the central bank were to increase the money supply, what impacts would it have on the economy? Use a diagram to explain your answer.arrow_forwardWhat is France  FX risk – is there a limitation or exchange rate control Other risks inherent to France  – macroeconomic weaknesses Provide a conclusion of your findingsarrow_forward
- Consider a positive country-specific aggregate demand shock. For a member country of a common currency area, the real exchange rate channel of adjustment to this shock is stabilizing. (Assume there is no policy response to the shock.) Â Draw a diagram depicting the adjustment. Also use equations.arrow_forwardWhat are the UK central bank's functions? How is the exchange rate of the country managed? Do you feel this choice of exchange rate management is beneficial to the country's GDP?arrow_forwardWhat does it mean when the dollar appreciates compared to when the dollar depreciates? Â Has the US dollar been relatively strong or weak over the past year? Â How does the strength of the dollar affect exports and imports?arrow_forward
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