Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 22, Problem 8QP
To determine
Check the statement whether a country with primary reserve currency can borrow at a lower interest rate than other countries.
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All of the following are factors that cause supply and demand for currencies to change EXCEPT:
A.
relative interest rates
B.
relative income levels
C.
relative GDP levels
D.
relative inflation rates
What techniques can a central bank use to stabilize the exchange value of its currency?
The difference between the amount we spend to import products from other countries and the amount we make when we export products to other countries is called the balance of trade. Why would the balance of trade affect the value of the US dollar? Is it better to import more or to export more? Why?
Chapter 22 Solutions
Macroeconomics
Ch. 22.2 - Prob. 1STCh. 22.2 - Prob. 2STCh. 22.2 - Prob. 3STCh. 22.2 - Prob. 4STCh. 22.3 - Prob. 1STCh. 22.3 - Prob. 2STCh. 22.3 - Prob. 3STCh. 22.3 - Prob. 4STCh. 22 - Prob. 1QPCh. 22 - Prob. 2QP
Ch. 22 - Prob. 3QPCh. 22 - Prob. 4QPCh. 22 - Prob. 5QPCh. 22 - Prob. 6QPCh. 22 - Prob. 7QPCh. 22 - Prob. 8QPCh. 22 - Prob. 9QPCh. 22 - Prob. 10QPCh. 22 - Prob. 11QPCh. 22 - Prob. 12QPCh. 22 - Prob. 13QPCh. 22 - Prob. 14QPCh. 22 - Prob. 15QPCh. 22 - Prob. 16QPCh. 22 - Prob. 1WNGCh. 22 - Prob. 2WNGCh. 22 - Prob. 3WNGCh. 22 - Prob. 4WNGCh. 22 - Prob. 5WNG
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- 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_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_forwardIf a country's currency is depreciating, will money supply grow SLOWER or FASTER than economic growth?arrow_forward
- If the central bank were to increase the money supply in a fixed exchange rate regime, what impacts would it have on the economy? Use a diagram to explain your answer.arrow_forwardDescribe some buyers and some sellers in the market for U.S. dollars.arrow_forwardWhat is the link between the foreign exchange market and the real economy?arrow_forward
- Why does the demand for foreign currency falls when its price risesarrow_forwardSuppose country A’s goods become more popular with foreign consumers, and country B’s less so. How would this affect each country, assuming that they (a) have their own independent currency and (b) share a common currency? Use the aggregate demand (AD) and aggregate supply (AS) framework to explain your answer, and comment briefly on the desirability of currency union.arrow_forwardWhy would a nation "dollarize"- meaning adopt another country's currency instead of having its own?arrow_forward
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