160-Exchange rate (yen per U.S. dollar)The graph shows the demand curve for U.S. dollars.Draw a new demand curve that shows the effect ofan increase in the U.S. interest rate differential. Label it.140-The U.S. interest rate differential rises when120-○ A. the U.S. interest rate falls and the foreign interestrate remains the same100-○ B. the gap between the U.S. interest rate and theforeign interest rate becomes smaller○ C. the U.S. interest rate falls and the foreign interestrate rises80-○ D. the U.S. interest rate rises and the foreign interestrate falls60-40-1.31.41.51.6D1.7⑤1.8Quantity (trillions of U.S. dollars per day)>>> Draw only the objects specified in the question.

The U.S. interest rate differential refers to the difference in interest rates between the United…

Answered: 160- Exchange rate (yen per U.S.…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 6PA

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If a countrys currency is expected to appreciate in value, what would you think will be the impact of expected exchange rates on yields (e.g., the Interest rate paid on government bonds) in that country? Hint: Think about how expected exchange rate changes and interest rates affect a currencys demand and supply.
6. Changes in the foreign-exchange market The following questions focus on the exchange rate between the Malaysian ringgit and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of ringgit you must pay for one krone. Suppose an economic downturn in Denmark causes Danish incomes to decrease, while Malaysian incomes remain unchanged. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal.
5. Changes in the foreign exchange market The following questions focus on the exchange rate between the Malaysian ringgit and the Mexican peso. Assume the exchange rate is flexible. The exchange rate is defined as the number of ringgit you must pay for one peso. Suppose an economic expansion in Mexico causes Mexican incomes to rise, while Malaysian incomes remain unchanged. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Mexican pesos if all other things remain equal. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Supply of Pesos Demand for Pesos Supply of Pesos Demand for Pesos QUANTITY OF PESOS The increase in Mexican incomes causes the Mexican peso to relative to the Malaysian ringgit and causes the Malaysian ringgit to relative to the Mexican peso. Suppose the…
At the official exchange rate of 2.5 dirham per euro, the euro is and the Moroccan dirham is that Moroccans pay for European exports than they would with a free-floating exchange rate. At the official dirham price of euros, there is a of euros in the foreign exchange market. which means Suppose the governments of the Eurozone and Morocco reevaluate their currencies so that their official exchange rate is now 1 dirham per 1 euro. This action results in of the euro.
5. Suppose there are only two countries in the world, U.S. and Mexico, with two currencies associated with them, dollar and peso respectively, traded in the foreign exchange market. All other things constant, explain how value of Peso changes, either appreciates or depreciates as the result of the following two events. Briefly explain why. Event a: Interest rates on savings bonds in Mexico rise above interest rates on savings bonds in the U.S. Event b: GDP grows faster in the U.S. than it does in Mexico.
Give typing answer with explanation and conclusion Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. Initially, the supply curve for USD is 100 + eN bln dollars per week and the demand curve is 140 - eN bln dollars per week. There is a financial crisis in Mexico and the government fears that it may lead to capital outflows that would make the crisis even worse. They decide that if Mexican Peso depreciates by more than 20% the central bank will step in and fix the exchange rate. As the crisis unfolds the demand for the U.S. dollars increases to 142 - eN and the supply of dollars falls to 99 + eN. How should the central bank of Mexico react to this change?
change rate $1.75 1.50 1.25 1.00 200 500 S d 700 900 950 1,000 S D₂ Quantity of euros traded (millions per day) 17) Refer to Figure 30-8. The equilibrium exchange rate is at A $1.25/euro. Suppose the European Central Bank pegs its currency at $1.00/euro. At the pegged exchange rate A) there is a shortage of euros equal to 200 million. B) there is a surplus of euros equal to 700 million. Othere is a shortage of euros equal to 500 million. D) there is a surplus of euros equal to 300 million.
8. Purchasing-power parity Using data from The Economist's Big Mac Index for 2019, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $5.74 in the United States and GBP 3.29 in the United Kingdom. The actual exchange rate between the British pound and the U.S. dollar was $1.25 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows: Dollar price of a Big Mac in the United Kingdom = GBP 3.29 x = $4.11 For the price you paid for a Big Mac in the United States, you could have purchased a Big Mac in the United Kingdom and had some change left over for fries! Complete the final column of the table by computing the dollar price of a Big Mac for the countries where this amount is not given. Note: Round your answers to the nearest cent. Euro area Switzerland United…
8. Suppose that last year, the nominal exchange rate between the Japanese yen and the British pound was ¥150.0 per £1.0, one unit of Japanese output cost ¥1300, and one unit of British output cost £8.0.a. What was the real exchange rate between the U.K. and Japan last year, expressed as the cost of British output (i.e. – the quantity of Japanese output that exchanges for 1 unit of British output)? In which country were goods more expensive last year?
1. Pricing foreign goods The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table forecasts nominal exchange rate data for June 13, 2023, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Foreign Currency Canadian dollar (CAD) Euro (EUR) Japanese yen (JPY) Mexican peso (MXN) United Kingdom pound (GBP) Cost of One Unit of Foreign Currency (Dollars) 0.7950 1.2035 0.009126 0.0920 1.8011 Suppose that on June 13, 2023, an ornamental bookcase handmade in Germany is priced at 840 EUR. The approximate U.S. dollar price of the bookcase would be If the nominal exchange rate for the U.S. dollar-Mexican peso falls from $0.092 to $0.0782 per Mexican peso, the U.S. dollar value, or relative to the Mexican peso. in
Problem 21-04 (algo) Suppose that the current Canadian dollar (CAD) to U.S. dollar exchange rate is $0.80 CAD = $1 US and that the U.S. dollar price of an Apple iPhone is $260. Instructions: In part a, enter your answer as a whole number. In part b, round your answer to 2 decimal places. a. What is the Canadian dollar price of an iPhone? $ CAD Next, suppose that the CAD to U.S. dollar exchange rate moves to $0.92 CAD = $1 US. b. What is the new Canadian dollar price of an iPhone? $ CAD c. Other things being equal, would you expect Canada to import more or fewer iPhones at the new exchange rate?
4) Suppose the price level in India is 9,500, the price level in the United States is 140, and the price level in Brazil is 750. Suppose the current nominal exchange rates are 75 Indian rupee per dollar and 5 Brazilian real per dollar. Calculate the real exchange rates (rounded to two decimal places) between each pair of countries. Note that you will have to first calculate the nominal exchange rate between Brazil and South India before calculating the real exchange rate between those two countries. (4

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