Master_Key_Economics.pdf_page-0064

Question 4 10 out of 10 points Suppose that the US Economy adopts a fixed exchange rate regime against the British Pound: BP=$1.3 If the market exchange rate is at BP=$1.2 ... (see picture below) E s* 1.3 1.2 Selected & Answers: There is an excess supply of British Pounds on the market, and the Fed needs to purchase Pounds in exchange for US dollars, which means to increase its reserves of British Pounds Answers: There is an excess demand of British Pounds on the market, and the Fed needs to purchase Dollars in exchange for British Pounds, which means to decrease its reserves of British Pounds & There is an excess supply of British Pounds on the market, and the Fed needs to purchase Pounds in exchange for US dollars, which means to increase its reserves of British Pounds There is an excess demand of British Pounds on the market, and the Fed needs to purchase Pounds in exchange for US dollars, which means to increase its reserves of British Pounds There is an excess supply of British Pounds on the market, and the Fed needs to purchase Dollars in exchange for British Pounds, which means to decrease its reserves of British Pounds Question 5 10 out of 10 points Suppose the elasticity of demand of imports in Japan is 0. The exchange rate goes from Yen=$1/100 to Yen=$/200 The value of exports of tractors from the US to Japan... Selected Answer: &a will be unchanged Answers: will fall will grow & will be unchanged