Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 3E
To determine
The state of the Euro area over the past several years.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Although it is a member of the European Community, Denmark is not part of the
eurozone; it has its own currency, the krone. Because the krone is pegged to the
euro, Denmark's central bank is obliged to maintain the value of the krone within
2.25 percent either above or below the value of the euro. According to an article
in the Wall Street Journal,
in 2017, the Danish central bank was forced to intervene in foreign currency
markets "to keep the krone from strengthening too much."
If the krone was strengthening, did it take more kroner to exchange for a euro or
fewer kroner? Briefly explain.
More kroner, because the krone has more value.
Fewer kroner, because the krone has less value.
Fewer kroner, because the krone has more value.
More kroner, because the krone has less value.
Answer the following questions.
A)About a decade ago, the future of the euro as a common currency was considered in danger.
B)Describe the factors that caused this crisis. What role did the ECB play in easing the crisis?
C)Is the crisis a thing of the past or could it re-appear?
3-13. As this edition went to press in mid-2015, concern was mounting that Greece would drop the euro. What has happened since then? Is Greek still using the euro?
Chapter 10 Solutions
Macroeconomics (Fourth Edition)
Knowledge Booster
Similar questions
- During the financial crisis that started in 2007, the value of the euro fell dramatically versus the US$. Explain what the effect would have been had you been planning a trip to Greece prior to the financial crisis and still decided to go in 2008.arrow_forwardThe euro is the official currency of almost all of the European Union as well as several smaller countries. It is the second-most traded currency in the world after the United States dollar. As of August 2018, with more than €1.2 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.S. dollar. By March 2002 it had completely replaced the former currencies of the European Union countries. Do you think that a common currency for North America (the U.S., Canada and Mexico) would be a good idea? Would it help facilitate trade? Why?arrow_forwardSuppose we discover that the Canadian dollar suddenly depreciates against the Euro. What could be responsible for this: Prices of goods and services in Europe rise more than prices in Canada OR Canadian tourist destinations become more attractive than those in Europe OR Interest rates in Europe rise more than interest rates in Canada? Choose one and explain.arrow_forward
- Explain how higher interest rate appreciates the value of the currency when in fact it increases the rate of inflation. How can you synthesize this issue?arrow_forwardAt the end of 2021, the Federal Reserve took an inventory of its foreign currency reserves. Since the previous year, the following had changed: How much did NCO change during this time period? Round to two (2) decimal places Currency (+/-) Change (millions) Yen 44.08 Yuan -9.78 US Dollars -45.15 Rupees 62.63 Riyals 66.59 Pesos 91.19 Shekels -92.54arrow_forward"The value of the currency of a domestic country tends to increase if its inflation rate is significantly lower than that of other countries". Right or wrong? Explain your answer.arrow_forward
- Give typing answer with explanation and conclusion One of the contentious issues between the US and China is the competitive devaluation of the currency. The value of countries' currencies has a significant impact on the economy. The import of products with comparatively low prices encourages currency devaluation in countries. Using what has just been declared, define what devaluation means and which countries have suffered the worst devaluation against the dollar after the 2022 pandemic. Include some factors to support your position. PLEASE ADD SOURCES TOOarrow_forwardThe U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…arrow_forwardThe U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…arrow_forward
- What happens to the exchange rate of a country’s currency when that country experiences high levels of inflation for an extended period of time? How will it affect the flow of that country’s currency in and out of the country? Explain your answers.arrow_forwardregarding the Mexican Financial Crisis of 1994-95 (also known as the Tequila Crisis). What were the issues leading up to this crisis that placed Mexico in a precarious position? What part did speculation have in exacerbating the problem? And how the relationship between downward pressure on the value of the dollar and Mexico's reserves of dollars to maintain this currency. What problem did Mexico face in trying to keep its currency from deprecating?arrow_forwardFor many years, the Chinese currency has been pegged to the U.S. dollar. Critics argue that this policy has resulted in an unfair advantage for Chinese manufacturers exporting product to the U.S., and has contributed to ballooning U.S. trade deficits. Pressure to revalue, including threats of trade sanctions against China, has led the Chinese government to adopt a slightly more flexible policy which pegs the Yuan to a basket of currencies rather than the dollar alone. Some in the U.S. continue to argue that this is not sufficient, and continue to exert pressure toward a policy of further revaluation. Chinese leaders feel that increasing the value of the yuan relative to the dollar would contribute to economic and political instability in China. Details: Pressures for Change China fixed the value of its currency in 1994 to the US currency Due to arguments that the yuan was undervalued and that the Chinese government needed to free the currency, the U.S. administration announced…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education