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 5CQQ
To determine
The impact of capital inflow on the exchange rate and interest rate.
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Students have asked these similar questions
An increase in the supply of U.S. dollars by the Federal Reserve will
a. raise the value of the dollar because it will stimulate U.S. economic growth
b. reduce the value of the dollar because of inflation fears in the United States
c. decrease the value of the dollar because it will force other countries to raise their interest rates
d. raise the value of the dollar because it will lead to higher U.S. interest rates
What 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.
One of Fiji's major trading partners is Australia. If Australia's GDP rises, the demand for Fiji's exports will _____, leading to a _____ shift in the demand for the Fijian dollar.
a. rise; right
b. rise; left
c. fall; right
d. fall; left
Give the answer with detail explanation.
Chapter 14 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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Similar questions
- The US and China are the two biggest economies of the world. Which of these situations will most likely increase the value of the US dollar as it trades with China? a. China’s GDP increases faster than US b. China’s exports increases sharply c. China imports more from the US than it exports to the US d. China exports more to the US than it imports from the USarrow_forwardIf there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.arrow_forwardInternational Finance (chapter 21) 4 What factors will shift the supply and demand for currency?arrow_forward
- Will an increase in attractiveness of the US as a tourist destination DECREASE or INCREASE the value of US dollar?arrow_forward21. What does Foreign Exchange mean? Why do we see currency fluctuations?arrow_forward6. If Canadian consumers expect the value of the Canadian dollar to rise against the US dollar, what impact would we expect this to have on Canadians' demand for American made products? a. The demand for American-made items would fall. b. The demand for American-made items would not change. c. The demand for American-made items would rise. d. The demand for American-made items would double.arrow_forward
- A civil war abroad causes foreign investors to movetheir funds to the safe haven of the United States,leading to _________U.S. interest rates and a_________ U.S. dollar.a. higher; weakerb. higher; strongerc. lower; weakerd. lower; strongerarrow_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_forwardA high value of a currency would result in which of the following?Select one:a. Greater competitiveness of exportsb. More exportsc. Increased demand of the higher value currencyd. Increased demand of exports of higher currency value products e. More ImportsIfarrow_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_forward40. Thailand is a net-importer. This means that they import more than they export. How does this affect the value of their currency with respect to foreign exchange? a.their currency will not be affected b.their currency will become strong c.their currency will become weak d.None of thesearrow_forwardIf there is an unrest in Turkey, and Turkish investors purchase U.S. securities, the Part 2 А. demand for the Turkish currency will rise. В. supply of the Turkish currency will fall. С. demand for the Turkish currency will stay the same. D. supply of the Turkish currency will rise.arrow_forward
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