9. A) Where does the market for foreign currency come from? How does this market work if we use the flexible exchange rate system? Using terms from lecture what happens to both countries currency if there is a shift of supply or demand? There were terms given that are used to describe changes in currency exchange rates, define and use these terms. B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 50 pesos and the exchange rate is $3/peso what is the U.S. price? C) If the demand for pesos goes up what happens to the exchange rate? Answer for the U.S. dollar and the Mexican peso. Now the demand to invest in Mexican real estate goes up what now happens to exchange rates?
9. A) Where does the market for foreign currency come from? How does this market work if we use the flexible exchange rate system? Using terms from lecture what happens to both countries currency if there is a shift of supply or demand? There were terms given that are used to describe changes in currency exchange rates, define and use these terms. B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 50 pesos and the exchange rate is $3/peso what is the U.S. price? C) If the demand for pesos goes up what happens to the exchange rate? Answer for the U.S. dollar and the Mexican peso. Now the demand to invest in Mexican real estate goes up what now happens to exchange rates?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![9. A) Where does the market for foreign currency come from? How does this market work if we use the
flexible exchange rate system? Using terms from lecture what happens to both countries currency if
there is a shift of supply or demand? There were terms given that are used to describe changes in
currency exchange rates, define and use these terms.
B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 50 pesos
and the exchange rate is $3/peso what is the U.S. price?
C) If the demand for pesos goes up what happens to the exchange rate? Answer for the U.S. dollar and
the Mexican peso. Now the demand to invest in Mexican real estate goes up what now happens to
exchange rates?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4dc512e6-6b84-462b-90ef-e71773060b9b%2F4cc06a04-97b7-4206-9383-d5133dcfe4f6%2Favkq4t.jpeg&w=3840&q=75)
Transcribed Image Text:9. A) Where does the market for foreign currency come from? How does this market work if we use the
flexible exchange rate system? Using terms from lecture what happens to both countries currency if
there is a shift of supply or demand? There were terms given that are used to describe changes in
currency exchange rates, define and use these terms.
B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 50 pesos
and the exchange rate is $3/peso what is the U.S. price?
C) If the demand for pesos goes up what happens to the exchange rate? Answer for the U.S. dollar and
the Mexican peso. Now the demand to invest in Mexican real estate goes up what now happens to
exchange rates?
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