Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 19, Problem 1CQ
To determine
Expert Solution & Answer
Explanation of Solution
The exchange rate is the rate at which the currencies are traded with each other. It can be considered as the quantity of one currency to be paid in order to obtain one unit of the foreign currency in the currency exchange market. In this case, when the dollar depreciates relative to Yen, it means that the dollar has lost its value against the Yen. Thus, more US dollar is needed to be paid in order to get a Yen in exchange.
Hence, as the Dollar depreciates relative to Yen, the
Economics Concept Introduction
Exchange rate: The exchange rate is the rate at which a domestic currency is exchanged with an international currency in a currency exchange market.
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Students have asked these similar questions
How does the fluctuating value of the Euro affect the price of German cars sold in the United States?
If the dollar depreciates relative to the Japanese yen, how will this affect the dollar price of a Japanese camera produced by Nikon, for example. How will this change influence the quantity of Nikon cameras purchased by Americans?
The following graph depicts the supply schedule for euros.
Hint: You can drag the black point (cross symbol) to various positions on the graph to see the values of the coordinates on the graph. You will not be
graded for any changes you make to the graph.
VALUE OF EURO (U.S. dollars per euro)
1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
0
50 100 150 200 250 300 350 400 450 500 550 600
QUANTITY OF EUROS (Billions)
At an exchange rate of 1.2 per euro, the quantity of euros supplied is
of euros supplied is
+
?
billion euros, while at an exchange rate of 1.8 per euro, the quantity
billion euros. This confirms that the supply schedule for euros is
sloping.
Chapter 19 Solutions
Economics: Private and Public Choice (MindTap Course List)
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