Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 2CQQ
To determine
The impact of appreciation of domestic currency on imports and exports.
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As domestic currency appreciates, we would expect
a. Trade deficit to decrease.
b. Trade deficit to increase.
c. Imports to decrease.
d. Exports to increase.
Malaysian exports create
a.
Supply of foreign currencies to Malaysia and a demand for RM in foreign countries.
b.
Demand of foreign currencies to Malaysia and supply for RM in foreign countries.
c.
Demand of foreign currencies to Malaysia and a demand for RM in foreign countries.
d.
Supply of foreign currencies to Malaysia and a supply for RM in foreign countries.
A positive balance of trade is when:
A.
imports are greater than exports
B.
exports are greater than imports
C.
exports equal imports
D.
All of the Above
Chapter 14 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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- If U.S. securities pay 6 percent interest, and if Great Britain’s securities pay 8 percent interest, then a. pounds depreciate relative to dollars. b. pounds appreciate relative to dollars. c. Great Britain’s imports will fall. d. Great Britain’s exports will rise.arrow_forwardWhat effect would a devaluation of a country's currency most likely have on its export volumes? A. Export volumes would decrease, as goods become more expensive in foreign markets. B. Export volumes would increase, as goods become cheaper in foreign markets. C. Export volumes would remain unchanged, as currency value does not affect trade. D. Export volumes would initially decrease, but then increase over time due to adjustments in trade agreements.arrow_forwardDraw a demand for dollars curve. Label it D. Draw a supply of dollars curve. Label it S. Draw a point at the equilibrium quantity and equilibrium exchange rate. Exchange rate (U.S. cents per Canadian dollar) 120- 110- Draw an arrow between the D and S curves that indicates a price at which there is a surplus of dollars. Label it. 100- 90- 80- 70- 60- 50- 20 50 70 30 40 60 80 Quantity (billions of Canadian dollars per day) >>> Draw only the objects specified in the question. Selected: Delete Clear nonearrow_forward
- A nation’s merchandise trade balance reflects _____. A.the value of exports of servicestrade b. in tangibles and intangibles c.the same information as its balance of payments d.trade in tangible products e.the value of imports of servicesarrow_forwardIf there is a decrease in the desire of Americans to purchase goods and services from other countries and put money in foreign banks and businesses then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would increase and the US dollar would appreciate. B. The equilibrium quantity of foreign currency would decrease and the US dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the US dollar would depreciate.arrow_forwardThe main items on the A. current account are imports and R.O.W. investments in Canada. B. financial account are exports and Canadian investments in R.O.W C. financial account are imports and R.O.W. investments in Canada. D. current account are exports and imports. E. current account are exports and Canadian investments in R.O.W.arrow_forward
- In the foreign exchange market, when the U.S. interest rate rises, the supply of dollars ________ and the foreign exchange rate ________. A. decreases; rises B. increases; falls C. increases; rises D. increases; does not change E. decreases; fallsarrow_forwardIf the demand for the goods that we export increases______?Group of answer choices 1The exchange rate is unaffected. 2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates). 3The exchange rate increases (the US $ appreciates). 4The exchange rate decreases (the US $ depreciates).arrow_forwardWhy would a country want to impose an exchange rate ceiling? a. A strong currency encourages imports and can be used to fight inflation. b. A strong currency stimulates an economy. c. A weak currency encourages imports and can be used to fight inflation. d. A weak currency will encourage exports and stimulate the economy.arrow_forward
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