2. Determining long term exchange rates Consider two countries, the United States and Japan, that trade with each other. Suppose that the productivity growth in the United States accelerates, but it remains the same in Japan. The following graph shows the supply and demand for the Japanese yen in the United States before the change in productivity. The vertical axis is the exchange rate of the yen in terms of the dollar, and the horizontal axis is the quantity of yen. Show how the change in productivity affects the equilibrium exchange rate by shifting one or both of the curves on the graph. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.

2. Determining long term exchange rates Consider two countries, the United States and Japan, that trade with each other. Suppose that the productivity growth in the United States accelerates, but it remains the same in Japan. The following graph shows the supply and demand for the Japanese yen in the United States before the change in productivity. The vertical axis is the exchange rate of the yen in terms of the dollar, and the horizontal axis is the quantity of yen. Show how the change in productivity affects the equilibrium exchange rate by shifting one or both of the curves on the graph. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 2 of 25 In which situation is a country most likely to choose a flexible exchange rate for its currency? O A. A country believes that its currency will be in low demand in global markets. B. A country worries that the value of its currency could rise and fall unpredictably. C. A country has a reputation for having a strong and stable economy over time. O D. A country wants to make sure that its currency is stable in all economic situations.
A 216.
5. Balance of payments and the foreign exchange market The following graph shows the market for euros in terms of dollars. The market is initially in equilibrium at $1.00 per euro and 4 billion euros. Suppose an economic expansion in the United States leads to an increase in the incomes of American households, causing imports from Europe to rise. On the graph, show the effect of an expansion in the United States that leads to an increase in American incomes.
QUESTION 22 3 pol Suppose that • The Elasticity of Imports in the USA in the short Run is 0.5 • The Elasticity of Imports in Japan in the short Run is 0.6 • The Elasticity of Imports in the USA in the long Run is 0.9 The Elasticity of Imports in the Japan in the long Run is 1 According to the Elasticities approach to the Current Account Balance, if the Exchange Rate goes from Yen=$1/100 to Yen $1/50 . O The Current Account Balance will be unchanged • The Current Account Balance in the US will deteriorate in the short run, and improve in the long run O The Current Account Balance in the US will deteriorate in the short run and in the long run O The Current Account Balance in the US will improve both in the short run and in the long run
I added the front page for context only. Please do D, E, and F ONLY!
3. The balance of payments The following table shows a hypothetical balance-of-payments statement for the United States. All figures are in billions of dollars. Complete the table by filling in the missing cells. Balance of Payments (Billions of U.S. dollars) Current Account Goods and Services Exports 200 Goods and Services Imports -280 Trade Balance Income (net) Current Account Balance Capital Account U.S. Capital Inflow U.S. Capital Outflow Capital Account Balance Statistical Discrepancy 98 -62 10 According to the table, the United States is running a trade The net balance of payments equals $ billion.
The following graph shows the market for euros in terms of dollars. The market is initially in equilibrium at $2.00 per euro and 8 billion euros. Suppose an economic downturn in the United States leads to a drop in American incomes, causing imports from Europe to decline. On the following graph, show the effect in the market for euros of an economic downturn in the United States that leads to a drop in European incomes. DOLLAR PRICE OF EUROS 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 0 2 Supply of Euros Demand for Euros 4 6 8 10 12 QUANTITY OF EUROS (Billions of euros) 14 Under a system of flexible exchange rates, the dollar will per euro. 16 Increase income taxes in the United States. Lower interest rates by way of monetary policy. Demand for Euros Subsidize the production of certain U.S. exports to Europe. Supply of Euros ? Now suppose that the United States maintains a fixed exchange rate of $2.00 per euro. Which of the following U.S. government policies would keep the balance-of-payments…
5) Indicate whether each of the following creates a demand for or a supply of European euros in foreign exchange markets: a. Liberty purchases an Airbus plane assembled in France b. Mercedes-Benz decides to build an assembly plant in Knoxville c. A Liberty student decides to spend a year studying at the Sorbonne in Paris d. An Italian manufacturer ships machinery from Rome to Venice on an Egyptian freighter e. It is widely expected that the euro will depreciate in the near future
2. Determining long-term exchange rates Consider two countries, the United States and Japan, that trade with each other. Suppose that the productivity growth in the United States accelerates, but it remains the same in Japan. The following graph shows the supply and demand for the Japanese yen in the United States before the change in productivity. The vertical axis is the exchange rate of the yen in terms of the dollar, and the horizontal axis is the quantity of yen Show how the change in productivity affects the equilibrium exchange rate by shifting one or both of the curves on the graph Note: Select and drag one or both of the curves to the desired position. Curves will snap Into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther EXCHANGE RATE (Dollars per yeni Demand QUANTITY (Millions of yen) As a result of the change in productivity, the U.S. doilar appreciates depreciates Demand 161 Supply
5. Balance of payments and the foreign exchange market The following graph shows the market for euros, which is initially in equilibrium. Suppose an economic expansion in Canada leads to an increase in the incomes of Canadian households, causing imports from Europe to rise. On the graph, illustrate the effect of an economic expansion on the market for euros by shifting the appropriate curve or curves. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. EXCHANGE RATE (Dollars per euro) Supply 1.25 XXX 1.00 0.75 2.00 1.75 1.50 0.50 0.25 0 Demand Supply Flexible exchange rates Fixed exchange rates (?)
#4 please
Dollars per Franc So .70 60 .50 40 Do D2 3 4 5 6 7 Quantity of Francs (Milions) Refer to Figure 14.1. Suppose that the United States increases its imports from Switzerland, resulting in a rise in the demand for francs from Do to D1. Under a floating exchange rate system, the new equilibrium exchange rate would be: Select one: а. $0.40 per franc b. $0.50 per franc С. $0.60 per franc d. $0.70 per franc