Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 15, Problem 10SQP
(a):
To determine
The direction of shift in the supply curve and
(b):
To determine
The direction of shift in the supply and demand curve, factor causing the change and movement in equilibrium due to Country U’s recession and
(c):
To determine
Impact of accelerated inflation in Country U while others face constant level of inflation.
(d):
To determine
Impact of increased real interest rate in Country U’s compared to other countries.
(e):
To determine
Impact of quota and high tariff on Country U’s exports by Japan.
(f):
To determine
Impact of increased tourism from Country U’s due to fare war among airlines.
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For each of the following situations, indicate the direction of the shift in the supply curve or the demand curve for dollars, the factor causing the change and the resulting movement of the equilibrium exchange rate for the dollar in terms of foreign currency.
1. American- made cars become more popular overseas
2. The United States experiences recession, while other nations enjoy economic growth.
3. Inflation rate accelerates in the United States, while inflation rates remain constant in the other nations.
4. Real interest rates in the United States rise, while real interest rates abroad remain constant.
5. The Japanese put quotas and high tariffs on all imports from the United States.
a. If the exchange rate changes from $1.70 per British pound (₤1) to $1.68 per ₤1, has the pound (₤) appreciated or depreciated? Has the dollar appreciated or depreciated?
b. What happens to the ₤-price that British residents pay for a $500 U.S. export good due to the exchange rate change above?
c. What happens to the $-price that U.S. residents pay for a ₤1200 import good from Britain?
d. How do these changes affect the economic welfare of U.S. exporters and U.S. importers?
2. a. If the exchange rate changes from $1.70 per British pound (₤1) to $1.72 per ₤1, has the pound (₤) appreciated or depreciated? Has the dollar appreciated or depreciated?
b. What happens to the ₤-price that British residents pay for a $500 U.S. export good due to the exchange rate change above?
c. What happens to the $-price that U.S. residents pay for a ₤1200…
1 Suppose that two countries, Indonesia and Vietnam, produce coffee. The currency unit used in Indonesia is the Rupiah (IDR). The currency unit used in Vietnam is the Dong (VND). In Vietnam, coffee sells for 4,500 dong (VND) per pound. The exchange rate is 1.57 VND per 1 IDR, EVND/IDR = 1.57.
2 If the law of one price holds, what is the price of coffee in Indonesia, measured in Rupiah (assume we are talking about the same type of coffee)? Please round your answer to the nearest whole number.
Assume the price of coffee in Indonesia is actually 3000 IDR per pound. Compute the relative price of coffee in Indonesia versus Vietnam (round your answer to 2 decimal places). Where will coffee traders buy coffee? Where will they sell coffee in this case? How will these transactions affect the price of coffee in Vietnam? In Indonesia?
Chapter 15 Solutions
Micro Economics For Today
Ch. 15.4 - Prob. 1GECh. 15.6 - Prob. 1GECh. 15 - Prob. 1SQPCh. 15 - Prob. 2SQPCh. 15 - Prob. 3SQPCh. 15 - Prob. 4SQPCh. 15 - Prob. 5SQPCh. 15 - Prob. 6SQPCh. 15 - Prob. 7SQPCh. 15 - Prob. 8SQP
Ch. 15 - Prob. 9SQPCh. 15 - Prob. 10SQPCh. 15 - Prob. 11SQPCh. 15 - Prob. 1SQCh. 15 - Prob. 2SQCh. 15 - Prob. 3SQCh. 15 - Prob. 4SQCh. 15 - Prob. 5SQCh. 15 - Prob. 6SQCh. 15 - Prob. 7SQCh. 15 - Prob. 8SQCh. 15 - Prob. 9SQCh. 15 - Prob. 10SQCh. 15 - Prob. 11SQCh. 15 - Prob. 12SQCh. 15 - Prob. 13SQCh. 15 - Prob. 14SQCh. 15 - Prob. 15SQCh. 15 - Prob. 16SQCh. 15 - Prob. 17SQCh. 15 - Prob. 18SQCh. 15 - Prob. 19SQCh. 15 - Prob. 20SQ
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