Not use ai please 1 Illustrate a simple balance sheet of the central banks of Japan and Australia. Show inyour diagram the effect on the components of the monetary base of each nation of theBank of Japan selling A$1 million bank deposits. Assume that the spot exchange rate is58.6 yen-per-Australian dollar (\/A$).2. Suppose that the reserve requirement in Australia is 20 percent and that the reserverequirement in Japan is 8 percent. Also suppose that the monetary base consists only oftransactions deposits. Using the information in Question 1, what is the maximum possiblechange in the money stock in each nation?

1. Balance Sheet IllustrationBalance Sheets of Central Banks:A balance sheet for a central bank…

Answered: 1 Illustrate a simple balance sheet of…

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter19: The International Monetary System: Order Or Disorder

Section: Chapter Questions

Problem 8DQ

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Similar questions

Suppose that political unrest in Egypt leads financial markets to anticipate a depreciation in the Egyptian pound. How will that affect the demand for pounds. supply of pounds, and exchange rate for pounds compared to, say, U.S. dollars?
What does it mean to say that a currency appreciates? Depreciates? Becomes stronger? Becomes weaker?
Suppose U.S. interest rates decline compared to the rest of the world. What would be the likely impact on the demand for dollars, supply of dollars, and exchange rate for dollars compared to, say, euros?
Is a country for which imports and exports comprise a large fraction of the GDP more likely to adopt a flexible exchange rate or a fixed (hard peg) exchange rate?
Does a higher rate of return in a nations economy, all other things being equal, affect the exchange rate of its currency? If so, how?
Why would a nation dollarizeâ€”that is, adopt another countrys currency instead of having its own?
2. Suppose that Canada and Nigeria each produce similar cars, which are traded internationally. The price of a car in Canada is 50,000 Canadian Dollars, while the price of the same car in Nigeria is 10,000,000 Nigerian Naira. The market exchange rate between Canadian Dollar and Nigerian Naira is 1 Canadian Dollar = 304.88 Nigerian Naira. a. Show that when using the market exchange rate, the price of the same car seems much cheaper in Nigeria or much more expensive in Canada (1 point). b. Calculate the PPP exchange rate between the two currencies (0.5 point) c. Show that the price of a car is actually the same when using the PPP exchange rate in the two countries. (0.5 point)
J 4
1. An increase in criminal activity in South Africa acts as a deterrent to foreign tourists considering visiting South Africa, and as a result, there is a decline in the number of American tourists to South Africa. Explain, with the aid of a graph, the effect of this on the rand/dollar exchange rate and the equilibrium quantity of dollars.2. Identify any two reasons that US dollars would be demanded in South Africa
A10
Give typing answer with explanation and conclusion Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. Initially, the supply curve for USD is 100 + eN bln dollars per week and the demand curve is 140 - eN bln dollars per week. There is a financial crisis in Mexico and the government fears that it may lead to capital outflows that would make the crisis even worse. They decide that if Mexican Peso depreciates by more than 20% the central bank will step in and fix the exchange rate. As the crisis unfolds the demand for the U.S. dollars increases to 142 - eN and the supply of dollars falls to 99 + eN. How should the central bank of Mexico react to this change?
Give typing answer with explanation and conclusion

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