Explain the impact on US export and import if the US dollar has appreciated in comparison with other currencies. For example, the exchange rate for the Mexican peso was 10.97 per dollar in 2003. Now in 2020, it is 20.86 Mexican pesos per dollar under this case the dollar has appreciated almost twice. Also, when the dollar appreciated slightly which is the case of the British pound from 0.62 in 2003 to 0.76 in 2020 per dollar. Also, when there is not either appreciation or
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- 1. Exchange-rate fluctuations and international competitiveness Comdemo is a hypothetical U.S. computer manufacturer. The following table shows Comdemo's production costs of producing one computer. Note that Comdemo denominates the costs of its inputs in dollars as well as francs. Initially, in period 1, the exchange value of the dollar is $0.50 per franc. Complete the Period 1 section in the following table by calculating the franc equivalent of the input costs and Comdemo's total cost of producing one computer. Cost of Producing One Computer Period 1: $0.50 per Franc Cost (Dollar) 150.00 120.00 Labor Dollar-denominated inputs Franc-denominated inputs 150.00 Energy cost 90.00 Total cost 510.00 Equivalent (Franc) 300.00 240.00 180.00 Period 2: $0.40 per Franc Cost Equivalent (Dollar) (Franc) 150.00 375.00 120.00 Suppose that in period 2, the dollar appreciates to $0.40 per franc. 90.00 300.00 225.00 Complete the "Period 2" section in the previous table by calculating the franc…arrow_forwardThe Dominican peso started the year at 55 pesos / $1, but then fell to 50 pesos / $1 over the summer. Was the Dominican peso stronger or weaker against the US dollar? Did the US dollar appreciate or depreciate against the Dominican peso?arrow_forwardplease do this for the country China.arrow_forward
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- Year 2014 2015 2016 US $ $1 $1 $1 British Pound 0.85 0.70 0.60 Based on the Exchange rates above, How might international trade be affected? A)It is cheaper for American to travel to EnglandB)The US will import more from EnglandC)England will export more to the USD)England will import more from the USarrow_forwardIf a French car costs 10,000 euros, a similar American car costs 15000 dollars, and a euro can buy 1.2 dollars. what is real exchange rates ( you may assume any currency as the “domestic currency”) If a French car costs 10,000 euros, a similar American car costs 15000 dollars, and a euro can buy 1.2 dollars. what is real exchange rates ( you may assume any currency as the “domestic currency”) ???arrow_forwardCountry Z exports $5 million of goods and services and imports $5 million of goods and services. It also has $10 million of foreign currency denominated foreign assets and $5 million of local currency denominated foreign liabilities both of which earn a fixed 5% return in their respective currencies.If the price elasticity of exports is 0.5 and the elasticity of imports is (-)0.4 what will happen to the current account if the exchange rate depreciates by 1%? Question 1Select one: a. it is unchanged b. improves by $0.005 million c. improves by $0.045 million d. improves by $0.055 million e. worsens by $0.005 millionarrow_forward
- If a German firm's cost of goods sold in UK is much greater than its sales in UK, the appreciation of the Pound has a ____ impact on the firm's negative; interest expenses positive; gross profit negative; gross profit positive; interest expensesarrow_forwardExplain the impact on US export and import if the US dollar has depreciated in comparison with other currencies. For example, the exchange rate for the Canadian dollar was 1.36 per U.S dollar in 2003. Now in 2020, it is 1.31 Canadian dollars per U.S.dollar under this case the dollar has suffered a slight depreciation. Also, when the dollar has depreciated in the case of the Chinese Yuan from 8.27 in 2003 to 6.69 yuans in 2020 per U.S dollar. Also, when there is not either appreciation or depreciation from 2003 to 2020 which is the case of Saudi Arabia currency its exchange rate remains the same 3.75 Riyals per dollar since 2003. Then explain the impact of U.S. exports and imports under these scenarios.arrow_forwardHere are data for the U.S. balance of payments in a given year. All figures are in billions of dollars. Answer all of the following: a.The balance of trade in goods and services is $____billion. Balance of trade= (1635+709)-(478+2371)= -505 b. The current account balance is $____billion. Current account= (-505+218)= -287. (-287-124)= -411 c.The capital and financial account balance is $____billion. Capital and financial account= (1044-632)=412. (412-1)=411 d. The overall balance of payments balance is $____ billion. Explain why this must be so. balance of payments= -411+411= 0 Here's is the information table: Foreign purchases of US assets - 632 Goods imports - 2,371 Service imports - 478 Net investment income +218 Service exports +709 Goods exports +1,635 Balance on the capital account -1 Net transfers -124 US purchases of assets abroad +1,044 Can you please check if my answer is correct and explain to me why answer d the overall balance of payments must be so?arrow_forward
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