Exploring Macroeconomics
Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Chapter 21, Problem 9P
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The effects on the supply of the euros, demand for the euros and the dollar price of the euros in respect of the given changes.

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In our pretend world there are two countries - Chile and Switzerland - that are engaged in trade. The firm Switzerland Chocolates Express sells Boxes of chocolate (a good) in Chile. Each Box of Chocolates sells for 6500 Chilean pesos in Chile. In Switzerland, each box of chocolates 11 Swiss Franc to produce. Assume that the firm has 1 million boxes of chocolate to sell. How much money (in Swiss Franc) would the firm make (or lose) on the sale at the following exchange rates: Rate 1: 550 Pesos per Swiss Franc Rate 2: 0.0015 Swiss Franc Per Chilean Peso
International Macroeconomics a) Why do economists typically view trade as beneficial to all countries involved? Explain what are the gains to trade. Are all individuals within a country better off as a resultof trade with other countries? Explain your reasoning.  b) Consider a country that adopts a fixed exchange rate regime. What are the potential benefitsof adopting a fixed exchange rate regime? What are the potential costs of adopting a fixedexchange rate regime?
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