Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 27.1, Problem 3QQ
To determine
Equilibrium Exchange rate.
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Suppose that the U.S. dollar-Chinese yuan exchange rate is fixed by the U.S. and Chinese governments. Assume also that labor is immobile between the United States and China due to high transportation costs.
Which of the following situations is likely to occur if there is a simultaneous increase in the demand for U.S. goods and a decrease in the demand for Chinese goods?
a) The Chinese unemployment rate will increase, and the country will undergo hard economic times for a sustained period.
b) The U.S. unemployment rate will increase, and the country will undergo hard economic times for a sustained period.
c) The Chinese unemployment rate will initially rise but then drop as the Chinese yuan depreciates against the U.S. dollar.
d) The Chinese unemployment rate will initially rise but soon drop as unemployed Chinese move to the United States for employment.
Given the demand and supply curves for dollars (in terms of the South African rand)
in the foreign exchange market. The outbreak of the Corona virus causes the South
African Rand to:
Select one:
a. Depreciate as the supply curve of USD shift to the left
b. Appreciate as the demand curve for USD shift to left
Depreciate as the supply curve of USD shift to the right
d. Appreciate as the demand curve for USD shift to right
e. Remain the same
Reason:
II O
The exchange rate between the United States dollar and the Japanese yen is determined in a flexible foreign
exchange market.
A. Assume that Japan is currently in a recession. What fiscal policy action could the Japanese government take
to eliminate the recession?
B. What would be the effect of the fiscal policy action identified in Part A on interest rates in Japan?
C. Draw a correctly labeled graph of the foreign exchange market for the United States dollar. Show on your
graph the impact of the change in interest rates identified in Part B on each of the following:
i. The supply of United States dollars
i. The equilibrium exchange rate of the United States dollar
D. What would be the effect of the change in the exchange rate identified in Part Cil on United States imports?
E. What would be the effect of the change in United States exports identified in Part D on United States
unemployment?
Chapter 27 Solutions
Microeconomics
Ch. 27.1 - Prob. 1QQCh. 27.1 - Prob. 2QQCh. 27.1 - Prob. 3QQCh. 27.1 - Prob. 4QQCh. 27.A - Prob. 1ADQCh. 27.A - Prob. 1ARQCh. 27.A - Prob. 1APCh. 27 - Prob. 1DQCh. 27 - Prob. 2DQCh. 27 - Prob. 3DQ
Ch. 27 - Prob. 4DQCh. 27 - Prob. 5DQCh. 27 - Prob. 6DQCh. 27 - Prob. 7DQCh. 27 - Prob. 8DQCh. 27 - Prob. 9DQCh. 27 - Prob. 10DQCh. 27 - Prob. 11DQCh. 27 - Prob. 1RQCh. 27 - Prob. 2RQCh. 27 - Prob. 3RQCh. 27 - Prob. 4RQCh. 27 - Prob. 5RQCh. 27 - Prob. 6RQCh. 27 - Prob. 7RQCh. 27 - Prob. 8RQCh. 27 - Prob. 9RQCh. 27 - Prob. 10RQCh. 27 - Prob. 1PCh. 27 - Prob. 2PCh. 27 - Prob. 3PCh. 27 - Prob. 4PCh. 27 - Prob. 5P
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