. a. All other things held equal, a higher value of the dollar (it takes more pesos to buy a dollar) will: Move you down along Demand Curve for Dollars. Move you up the Supply Curve for Dollars. Shift the Supply Curve for Dollars. Shift the Demand Curve for Dollars. b. The equilibrium exchange rate between the dollar and peso is: Determined primarily by the demand of Argentines for US goods. Determined primarily by the demand of US Citizens for Argentine goods. Determined by the interaction of both the above. Entirely random. c, In a hypothetical foreign exchange market where exchange rates are completely free to move in response to market forces, the equilibrium exchange rate of pesos to the dollar would be where; Argentina has a trade surplus with the US. Argentina has a trade deficit with the US. Trade between the US and Argentina is in balance (neither country has a trade deficit or surplus with the other) Whatever rate the Argentine Central Bank decided to set.
1. a. All other things held equal, a higher value of the dollar (it takes more pesos to buy a dollar) will:
|
Move you down along |
||
|
Move you up the Supply Curve for Dollars. |
||
|
Shift the Supply Curve for Dollars. |
||
|
Shift the Demand Curve for Dollars. |
b. The equilibrium exchange rate between the dollar and peso is:
|
Determined primarily by the demand of Argentines for US goods. |
||
|
Determined primarily by the demand of US Citizens for Argentine goods. |
||
|
Determined by the interaction of both the above. |
||
|
Entirely random. |
c, In a hypothetical foreign exchange market where exchange rates are completely free to move in response to market forces, the equilibrium exchange rate of pesos to the dollar would be where;
|
Argentina has a trade surplus with the US. |
||
|
Argentina has a |
||
|
Trade between the US and Argentina is in balance (neither country has a trade deficit or surplus with the other) |
||
|
Whatever rate the Argentine Central Bank decided to set. |
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
