5.0 EXCHANGE RATE (Dollars per euro) 4.5 4.0 3.5 3.0 32222 2.5 2.0 1.5 1.0 0.5 0 0 25 50 50 S Ο D Short-Run Equilibrium S 1 Long-Run Equilibrium 75 100 125 150 175 200 QUANTITY (Euros) QUANTE (US) 225 250 The supply schedule of euros becomes more elastic, as shown by S₁. The dollar appreciates to $1.50 per euro. The dollar depreciates to $2.50 per euro. Referring t exchange The quantity of euros supplied decreases. The price of U.S. exports increases, and the quantity of U.S. exports demanded decreases. Step 1. 2. 3. 4. 5. ? events that led to the long-run equilibrium

5.0 EXCHANGE RATE (Dollars per euro) 4.5 4.0 3.5 3.0 32222 2.5 2.0 1.5 1.0 0.5 0 0 25 50 50 S Ο D Short-Run Equilibrium S 1 Long-Run Equilibrium 75 100 125 150 175 200 QUANTITY (Euros) QUANTE (US) 225 250 The supply schedule of euros becomes more elastic, as shown by S₁. The dollar appreciates to $1.50 per euro. The dollar depreciates to $2.50 per euro. Referring t exchange The quantity of euros supplied decreases. The price of U.S. exports increases, and the quantity of U.S. exports demanded decreases. Step 1. 2. 3. 4. 5. ? events that led to the long-run equilibrium

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter19: International Finance And The Foreign Exchange Market

Section: Chapter Questions

Problem 1CQ

See similar textbooks

Similar questions

Give typing answer with explanation and conclusion
PQ 8 The simple Marshall-Lerner condition would suggest that one of the following cases would produce a worsening of the trade balance if the country's currency depreciated. Which one? (The negative sign on elasticities is being ignoredf; also, assume that trade is initailly balanced) a. elasicity of demand for exports = .8; elasticity of demand for imports = .5 b. elasicity of demand for exports = .4; elasticity of demand for imports = .6 c. demand curve for exports is verttical; demand curve for imports is horizontal d. elasticity of demand for exports = .8; elasticity of demand for imports = .1
Suppose there is a reduction in foreign output, Y*. This reduction in Y* will cause which of the following in the domestic country?a reduction in outputa reduction in consumptiona reduction in net exportsall of the abovenone of the above
a) Compute the ratio of exports to imports for the total and for eachcategory of goods listed in the table. Add the ratios to the table (you can edit thetable by clicking on it. If by any chance this does not work for you, make yourown table and insert it here)
Consider a non-oil-exporting economy in its long-run equilibrium. Which of the following explains the ultimate long-run effect of a decrease in international oil price on the GDP of this economy? The GDP will ultimately increase. O The GDP will ultimately decrease. The GDP will ultimately be at potential output, in the absence of downward- sticky wages. The effect on GDP will be ambiguous.
A relatively small U.S. balance-of-trade deficit is commonly attributed to a strong demand for U.S. exports. What do you think is the underlying reason for the strong demand for U.S. exports? Cite example that prove your reasons.
What is bought and sold in the foreign exhange market?
What happens if there is a shortage or a surplus of Canadian dollars in the foreign exchange market? *** If a shortage of Canadian dollars occurs in the foreign exchange market, the and the exchange rate A O A. quantity of Canadian dollars demanded increases and the quantity of Canadian dollars supplied decreases; falls OB. demand for Canadian dollars increases and the supply of Canadian dollars decreases; rises OC. quantity of Canadian dollars demanded decreases and the quantity of Canadian dollars supplied increases; COLL 120- 110 100+ 90- 80- 70- Exchange rate (U.S. cents per Canadian dollar) S 60+ D
When there is a surplus of dollars in the foreign exchange market, O A. the demand for Canadian dollars will increase so the foreign exchange market can move into equilibrium B. prices in Canada will fall relative to prices in the United States O C. the supply of Canadian dollars will increase so the foreign exchange market can move into equilibrium O D. the forces of supply and demand pull the foreign exchange market into equilibrium Click to select vour answer and then clic Chock Ancuor
What will the effect of the new price for dollars be on export trade between South Africa and the United States
If the U.S. Congress imposes a quota on imports of Japanese cars due to claims of "unfair" trade practices, and Japanese demand for American exports increases at the same time, then, inthe long run ________, everything else held constant.a) the Japanese yen will appreciate relative to the U.S. dollarb) the Japanese yen will depreciate relative to the U.S. dollarc) the Japanese yen will either appreciate, depreciate or remain constant against the U.S. dollard) there will be no effect on the Japanese yen relative to the U.S. dollar
3. Why the aggregate demand curve slopes downward The graph below shows the aggregate demand (AD) curve for a hypothetical economy. At point X, the quantity of output demanded is $500 billion, and the price level is 120. Moving up along the AD curve from point X to point Y, the quantity of output demanded falls to $300 billion, and the price level rises to 140. PRICE LEVEL 170 160 150 140 130 120 110 100 90 0 100 X 200 AD 300 400 500 600 OUTPUT (Billions of dollars) 700 800 ?