The following question focuses on the exchange rate between U.S. dollars and Brazilian reais, defined as the number of U.S. dollars you must pay forone real.Suppose that preferences for goods made in Brazil change in the United States, causing U.S. consumers to purchase fewer goods and services madein Brazil.Drag the appropriate curve(s) on the following graph to illustrate how this change affects the market for reais.Supply of reaisDemand for reaisSupply of reaisDemand for reaisQUANTITY OF REAISA change in preferences that causes U.S. consumers to buy fewer Brazilian-made goods and services will cause the U.S. dollar torelative to the real.PRICE OF A DOLLAR (In reais)

The U.S consumers purchase fewer goods made in Brazil. Thus, demand for Brazilian real will fall and…

Answered: The following question focuses on the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the money market and FX diagrams to answer the following questions. This question considers the relationship between the Indian rupee (Rs) and the U.S. dollar ($). The exchange rate is in rupees per dollar, ERs/$. On all graphs, label the initial equilibrium point A. a. Illustrate how a permanent increase in India’s money supply affects the money and FX markets. Label your short-run equilibrium point B and your long-run equilibrium point C. b. By plotting them on a chart with time on the horizontal axis, illustrate how each of the following variables changes over time (for India): nominal money supply MIN, price level PIN, real money supply MIN/PIN, interest rate iRs, and the exchange rate ERs/$. c. Using your previous analysis, state how each of the following variables changes in the short run (increase/decrease/no change): India’s interest rate iRs, ERs/$, expected exchange rate EeRs/$, and price level PIN. d. Using your previous analysis, state how each of the…
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Consider the aggregate economy represented by the graph below. Assume the economy is initially in equilibrium at point A. How would the equilibrium price and quantity change if changes in currency exchange rates make exports cheaper? Price level (GDP deflator. 2009-100) P₁ LRAS₁ GDP SRAS₁ Real GDP (trillions of 2009 dollars) AD₁ The equilibrium price would rise and the equilibrium quantity would fall. The equilibrium price and quantity would remain unchanged. The equilibrium price and quantity would rise. The equilibrium price and quantity would fall.
Suppose that the euro is trading at $1.10 per euro in the foreign exchange market. Next, suppose that the exchange rate falls to $0.73 per euro, due to falling Interest rates In the eurozone. The followIng graph shows the supply and demand curves for dollars In the forelgn exchange market. On the following grah, shift ether the supply curve for dollars or the demand curve for dollars to reflect the tnfluence of "carry trade" (In isolation from other factors that may affect the exchange rate) on the exchange rate for dollars. (Hint: Carefully consider whtch price is measured on the vertical axts and which currency Is being measared on the hortzontal axis.) O dalas Dalas QUANTITY (dolars) PRICE OF DOLLARS (euros per dollar)
a decrease an increase no change REAL GDP our answer to the graph question, the appreciation of the U.S. dollar leads to in aggregate output in the United States. in the aggregate price level and
Refer to the figure at right. Suppose the equilibrium moves from E' to E. An event that could have caused this movement is S A. an increase in the perceived stability of the U.S. economy. B. an increase in U.S. productivity. C. an increase in the real interest rate in the United States. D. an increase in demand for Japanese - produced goods by U.S. residents. E E' D1 D2 Quantity of Yen per Day Price per Yen ($)
2
The exchange rate between the United States dollar and the Japanese yen is determined in a flexible foreign exchange market. A. Assume that Japan is currently in a recession. What fiscal policy action could the Japanese government take to eliminate the recession? B. What would be the effect of the fiscal policy action identified in Part A on interest rates in Japan? C. Draw a correctly labeled graph of the foreign exchange market for the United States dollar. Show on your graph the impact of the change in interest rates identified in Part B on each of the following: i. The supply of United States dollars i. The equilibrium exchange rate of the United States dollar D. What would be the effect of the change in the exchange rate identified in Part Cil on United States imports? E. What would be the effect of the change in United States exports identified in Part D on United States unemployment?
The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate between the PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three goods in Peru and the United States. Table 1 also gives the expenditure shares of each good (i.e., what fraction of total expenditures do people spend on each good). Table 1. Local Prices & Expenditure Shares in Peru and the U.S. Item Expenditure Share Prices in Local Currencies Peru U.S. Corn (1 kg) T-Shirts (1 shirt) Rent (2 bedroom apartment) 0.3 6 PNS 2 USD 0.2 45 PNS 15 USD 0.5 1,000 PNS 1,000 USD 6. Calculate and report the Purchasing Power Parity (PPP) exchange rate between the PNS and the USD. PPP Exchange Rate: 7. Peru's GDP per capita in 2020 was 18,000 PNS. Calculate and report Peru's GDP per capita in USD using the Official Versus PPP exchange rates. Peru's GDP per capita in USD using Official Exchange Rate: Peru's GDP per capita in USD using PPP Exchange Rate: 8. Use the space…
4. Pricing foreign goods The exchange rate is the price of one currency in terms of another currency. An 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 exchange rate data for March 16, 2018, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Cost of One Unit of Foreign Currency Foreign Currency (Dollars) Lithuanian litas (LTL) 0.3666 Canadian dollar (CAD) 0.8493 Euro (EUR) 1.3288 Mexican peso (MXN) 0.0889 United Kingdom pound (GBP) 1.8965 Suppose that on March 16, 2018, an antique woven rug handmade in Lithuania is priced at LTL 2,750. The approximate U.S. dollar price of the rug would be If the exchange rate for the U.S. dollar-Lithuanian litas rises from $0.3666 to $0.4216 per Lithuanian litas, the U.S. dollar v in value, or relative to the Lithuanian litas. 925 PM search N O 33°F 12/5/2021 21 hp…
You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible. What is the effect on the foreign exchangemarket (the $ market)? 12. What impact will this have on imports?A. increaseB. decreaseC. remains unchanged 13. What impact does the change in the exchangerate have on aggregate demand?A. increase (shifts to the right)B. decrease (shifts to the left)C. remains unchanged 14. What happens to the aggregate supply curve?A. increase (shifts to the right)B. decrease (shifts to the left)C. remains unchanged

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