ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Assume that Canada and the United States frequently trade with each other. Under the freely floating exchange rate system, low inflation in the U.S. will place ____ pressure on Canadian dollars (versus U.S. dollars), ____ the amount of Canadian dollars available for sale, and result in ____ inflation in Canada. a) upward; reduce; unchanged b) upward; increase; lower c) downward; reduce; lower d) downward; increase; unchanged e) None of the abovearrow_forwardThe economy starts at C point. If the government successfully lower its currency's exchange rate (one-time action, no further manipulation), then the economy will most likely to OA. moves to B in both in the short run and in the long run. O B. move to B in the short run and A in the long run. OC. moves to D in the short run but move back to C in the long run. O D. moves to D in bothin the short and long run. O E. stays in the C in the short run, but moves to B in the long run.arrow_forwardIn a fixed exchange rate system, ..... A. the International Monetary Fund determines exchange rates. B. market forces play a role in determining the fixed value of a currency. C. market forces and the country's stock of gold determine its exchange rate. D. a central bank affects the value of a currency by changing its foreign exchange reserves.arrow_forward
- Give typing answer with explanation and conclusionarrow_forwardIn Minland, the central bank lowers the interest rate from 5 per cent a year to 3 per cent a year. a.Describe in detail the steps that the Bank of Minland must follow to make the interest rate fall? b.Describe the effects of the lower interest rate on consumption expenditure and investment. c. Describe the effects of the lower interest rate on the exchange rate of the Minland dollar for the UK pound. d.Describe the effects of the change in the Minland dollar exchange rate on Minland’s net exports. e.Explain whether the change in the interest rate shifts or brings a movement along Minland’s interest-sensitive expenditure curve. f.Explain the full set of ripple effects of the interest rate cut ending with the changes in real GDP and the price level.arrow_forwardWhich of the following would increase the U.S. demand for foreign currency? a. an increase in U.S. real interest rate b. an increase in incomes abroad c. a decrease in the U.S. demand for foreign goods d. an increase in the U.S. demand for foreign goods e. a decrease in U.S. income O Icon Key Ox 0 F8 F9 prt sc F10arrow_forward
- Suppose the RBA decreasesits targetinterest rate. What would be the impact on the Australiandollar and stimulate net exports. In your answer, discuss the actions of Australian and foreignresidents towards the Australian dollar.arrow_forwardCover A strong dollar is normally expected to cause: O low unemployment and low inflation in the U.S. O high unemployment and high inflation in the U.S. O high unemployment and low inflation in the U.S. O low unemployment and high inflation in the U.S. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.arrow_forward59 please quikcly thanks ! If the Bank of Canada raises its target for the overnight interest rate from 3 percent to 3.25 percent while interest rates in other countries do not change, the result is _____ of financial capital, _____ in demand for Canadian dollars and _____ of the Canadian dollar. a.An outflow; an increase; an appreciation. b.An inflow; an increase; a depreciation. c.An inflow; an increase; an appreciation. d.An outflow; a decrease; a depreciation. e.An inflow; a decrease; a depreciation.arrow_forward
- 3. If interest rates increase in a country with a fixed exchange rate, what will the central bank do? A. Buy the country's currency B. Sell the country's currency C. Engage in contractionary fiscal policy 4. The United States has floating exchange rates. Suppose there is an increase in inflation in the United States. What will happen? A. The U.S. central bank will sell U.S. currency so the exchange rate remains constant B. The U.S. central bank will buy Euros so the exchange rate remains constant C. The exchange rate (price of a dollar) will go up D. The exchange rate (price of a dollar) will go down 5. Belize uses a fixed exchange rate, with one Belize dollar equal to one half of a U.S. dollar. There is an increase in U.S. citizens traveling to Belize on vacation. What will the central bank do? A Buy the country's currency B. Sell the country's currency Sell bonds to banks C.arrow_forwardChina has a current trade surplus and considering only the direct effect on income, if the Chinese National bank used expansionary monetary policy, the policy would tend to: A. decrease the exchange rate and increase the trade surplus.B. increase the exchange rate and increase the trade surplus.C. decrease the exchange rate and decrease the trade surplus.D. increase the exchange rate and decrease the trade surplus. The recent increase in the Fed Funds rate at the direction of the Federal Reserve tends to: A. lower U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar.B. lower U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar.C. raise U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar.D. raise U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar. one Of the four choices below, which causes a shift in the Supply of dollars to…arrow_forwardSuppose a country's central bank announces that it is decreasing the long-run money growth rate to tame inflation. The country's currency will suddenly and its rate of depreciation will then O appreciate; rise O appreciate; fall O depreciate; rise O depreciate; fallarrow_forward
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