depreciation

We noted that in 1900, the fixed exchange rate between the British pound and the U.S. dollar was 1 pound equals $5. What is the exchange rate today? Whose currency has gained the most in purchasing power? What caused this dramatic change in the exchange rate?

U.S. consumer spending reached record highs in 2021 coming out from the covid-19 slump. It is expected that 15% of incomes is spent on imported goods and services. How could this affect exchange rate of the U.S. dollar against our major trading partner

Currency traders expect the dollar to depreciate. What impact will this have on equilibrium in the foreign exchange market? The dollar will appreciate, and the equilibrium quantity of dollars will decrease. The dollar will depreciate, and the equilibrium quantity of dollars exchanged will decrease. The dollar will appreciate, and the equilibrium quantity of dollars will increase. The dollar will depreciate, and the change in the equilibrium quantity of dollars exchanged cannot be determined.

On June 1, 2016, the exchange rate for U.S. dollars and euros was approximately $1.00 = €0.90, as shown in the market for U.S. dollars below. Suppose the interest rate is expected to fall in the European Union (relative to the interest rate in the U.S.). How will this affect the value of the dollar relative to the euro? Exchange Rate (€/S) 0.9 Quantity of Dollars Traded. D₁ S₁

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24. The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 10%. The current exchange rate for the Japanese yen (¥) is $0.0075. After supply and demand for the Japanese yen has adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be:

Accel Co. produces a standard tennis racket in the Netherlands and sells it online to consumers in the United States. This racket competes with a tennis racket produced by Malibu Co. in the United States, which is of similar quality and is priced at about $140. Accel has set the price of its tennis racket at 100 euros. Assuming that the euro's exchange rate (during the sales month in question) was $1.60, then the price of Accel's racket to U.S. consumers is $_________ (enter a whole number). Because U.S. consumers could buy a Malibu racket for only $140, Accel only sold about 1,000 rackets to U.S. consumers in that month. Since then, however, the euro's value has weakened; this month, the euro's exchange rate is only $1.20. U.S. consumers can now purchase the Accel tennis racket for $_________(enter a whole number), which is less than that charged for the U.S. Malibu racket. In this month, Accel sold 5,000 rackets. The U.S. demand for this tennis racket is price-elastic (sensitive to…

If the U.S. dollar depreciates 20 percent, how does this affect the export and domestic sales of a U.S. manufacturer? Explain.

Answer the followings: 1. A depreciation of the dollar on the foreign exchange market would result in: A) a decrease in the dollar prices paid by U.S. importers. B) foreign holidays for U.S. residents to be less expensive. C) a decrease in the demand for U.S. exports. D) an increase in the foreign currency prices paid for U.S. exports. 2. The exchange rate for one U.S. dollar is 1.2 Euros and 1.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 0.9 Euro and 1.7 British pounds. We can say: A) the dollar has depreciated relative to both British pounds and Euros. B) the dollar has appreciated relative to both British pounds and Euros. C) the dollar has appreciated relative to Euros and depreciated relative to British pounds. D) the dollar has appreciated relative to British pounds and depreciated relative to Euros. 3. The cost of a trip to New York, US, was $5000. Two weeks later, the US dollar appreciated against the British pound. If the price of the…