Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 31, Problem 5PA
Subpart (a):
To determine
The impact of appreciation of US dollar.
Subpart (b):
To determine
The impact of appreciation of US dollar.
Sub part (c):
To determine
The impact of appreciation of US dollar.
Sub part (d):
To determine
The impact of appreciation of US dollar.
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When a country's currency appreciates, is this generally good news or bad news for a country's consumers? Is it generally good or bad news for the country's businesses? Explain your reasoning - try to use examples.
Chapter 31 Solutions
Principles of Economics (MindTap Course List)
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Similar questions
- Part C Directions: Answer the remaining two questions (HINT: you may want to refer back to the lesson). 9. When a currency appreciates, there are always groups, in each country, who benefit from a stronger currency. What two groups would benefit from the US dollar becoming stronger (appreciating). 10. When a currency depreciates, there are always groups, in each country, who benefit from a weaker currency. What two groups who would benefit from the US dollar becoming weaker (depreciating).arrow_forwardWhen a country's currency appreciates,arrow_forwardDiscuss the Foreign Exchange Markets and its impact on the global economy.arrow_forward
- If there is a decrease in the desire of Americans to purchase goods and services from other countries and put money in foreign banks and businesses then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would increase and the US dollar would appreciate. B. The equilibrium quantity of foreign currency would decrease and the US dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the US dollar would depreciate.arrow_forwardIf there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.arrow_forwardDescribe the foreign exchange market and its components.arrow_forward
- Describe how a change in the exchange rate affected your firm. Explain what happened to your price and quantity. How can you profit from future shifts in the exchange rate? How do you predict future changes in the exchange rate?arrow_forwardUnder a system of flexible exchange rates, what will correct a deficit in a country's balance of payments? a. an appreciation in the nation's currency b. a decline in the nation’s domestic price level c. a depreciation in the nation's currency d. an increase in the nation’s inflation rate 2. Which of the following would supply Canadian dollars to the foreign exchange market? a. an increase in the number of Canadians going to Las Vegas over the holidays b. an increase in spending due to American tourists in Canada c. the sale of a Canadian corporation to a German investor d. the sale of wheat from Manitoba to a European bakeryarrow_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
- What are the two most plausible reasons why countries become international lenders? What two countries fit those plausible reasons ?arrow_forwardWhich of the following companies would gain from foreign currency depreciation? a. Companies that export goods and services. b. Companies that buy bonds issued by the foreign government. c. Companies that borrow in foreign currency. d. Companies that invest in the foreign equity markets.arrow_forwardwhen a domestic investor buys a foreign asset, the financial account would rise, stay the same or fall?arrow_forward
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