Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 34, Problem 8MCQ
To determine
Ways to keep the Yuan-US dollar exchange rate constant.
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Suppose that yesterday, the U.S. dollar-Japanese yen exchange rate was $1=¥0.553546. The price of one Japanese yen in terms of a U.S. dollar was ___ .
Suppose that today the U.S. dollar-Japanese yen exchange rate falls to $1=¥0.533585 for one dollar. This means that between yesterday and today, the U.S. dollar has ___ against the Japanese yen. The price of a Mexican peso in terms of the U.S. dollar is now ___ .
If a country with floating exchange rates uses an expansionary monetary policy, the domestic interest rate:
A)
increases, demand for the domestic currency increases, supply of the domestic currency decreases, and the exchange rate increases.
B)
falls, demand for the domestic currency decreases, supply of the domestic currency increases, and the exchange rate decreases.
C)
falls, demand for the domestic currency remains unchanged, supply of the domestic currency increases, and the exchange rate decreases.
D)
falls, demand for the domestic currency decreases, supply of the domestic currency increases, and the effect on the exchange rate is ambiguous.
Answer the followings:
1. A depreciation of the dollar on the foreign exchange market would result in:
A) a decrease in the dollar prices paid by U.S. importers.
B) foreign holidays for U.S. residents to be less expensive.
C) a decrease in the demand for U.S. exports.
D) an increase in the foreign currency prices paid for U.S. exports.
2. The exchange rate for one U.S. dollar is 1.2 Euros and 1.5 British pounds. Exactly six months later, the
exchange rate for one U.S. dollar is 0.9 Euro and 1.7 British pounds. We can say:
A) the dollar has depreciated relative to both British pounds and Euros.
B) the dollar has appreciated relative to both British pounds and Euros.
C) the dollar has appreciated relative to Euros and depreciated relative to British pounds.
D) the dollar has appreciated relative to British pounds and depreciated relative to Euros.
3. The cost of a trip to New York, US, was $5000. Two weeks later, the US dollar appreciated against the British
pound. If the price of the…
Chapter 34 Solutions
Foundations of Economics (8th Edition)
Ch. 34 - Prob. 1SPPACh. 34 - Prob. 2SPPACh. 34 - Prob. 3SPPACh. 34 - Prob. 4SPPACh. 34 - Prob. 5SPPACh. 34 - Prob. 6SPPACh. 34 - Prob. 7SPPACh. 34 - Prob. 8SPPACh. 34 - Prob. 9SPPACh. 34 - Prob. 10SPPA
Ch. 34 - Prob. 1IAPACh. 34 - Prob. 2IAPACh. 34 - Prob. 3IAPACh. 34 - Prob. 4IAPACh. 34 - Prob. 5IAPACh. 34 - Prob. 6IAPACh. 34 - Prob. 7IAPACh. 34 - Prob. 8IAPACh. 34 - Prob. 1MCQCh. 34 - Prob. 2MCQCh. 34 - Prob. 3MCQCh. 34 - Prob. 4MCQCh. 34 - Prob. 5MCQCh. 34 - Prob. 6MCQCh. 34 - Prob. 7MCQCh. 34 - Prob. 8MCQ
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- Suppose that yesterday, the U.S. dollar was trading on the foreign exchange market at 0.75 eurosper U.S. dollar and today the U.S. dollar is trading at 0.80 euros per U.S. dollar. Which of the twocurrencies (the U.S. dollar or the euro) has appreciated and which has depreciated today?b) Suppose that the exchange rate for the Mexican peso fell from 15 pesos per U.S. dollar to 10 pesosper U.S. dollar. What is the effect of this change on the quantity of U.S. dollars that people plan tobuy in the foreign exchange market?c) Suppose that the exchange rate rose from 80 yen per U.S. dollar to 90 yen per U.S. dollar. What isthe effect of this change on the quantity of U.S. dollars that people plan to sell in the foreignexchange market?arrow_forwardThis question concerns the mechanism of a reserve currency standard. Two countries, X and Y, have two currencies, x and y, fixed to the reserve currency, the U.S. dollar. Suppose the exchange rate between x and the U.S. dollar is 3x per dollar. Suppose the exchange rate between y and the U.S. dollar is 5y per dollar. Explain (using numbers) the mechanism if the x-y exchange rate was 0.5 x per y.arrow_forwardThe current exchange rate is $1.00 = 1.50 Swiss franc. The exchange rate is expected to be $1.00 = 1.25 Swiss franc in six months. The U.S. dollar is expected to A. depreciate and the U.S. will import more from Switzerland B. appreciate and the U.S. will export more to Switzerland C. appreciate and the U.S. will import more from Switzerland D. depreciate and the U.S. will export more to Switzerlandarrow_forward
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