According to the monetary approach, the exchange rate can be expressed as Multiple Choice O O none of the options Ps = MsVs Y$ S = (M) × ( ) × ( ) X S = ( M ) × ( \ ) × ( ² )
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- The Central American country of Belize is one of approximately 14 Caribbean community countries that pegs its currency to the U.S. dollar. The pegged rate is 2 Belize dollars equal 1 U.S. dollar (2 BZD = 1 USD or 1 BZD = 0.50 USD). This is illustrated in the figure below. Exchange Rate (USD BZD) 2.00 1.00 0.50 D Quantity of Belize dollars traded per day How will the actions of speculators affect this market? O The Belize dollar supply curve will shift to the right and the Belize dollar demand curve will shift to the left. O The Belize dollar supply curve and the Belize dollar demand curve will shift to the right. O The Belize dollar supply curve will shift to the left and the Belize dollar demand curve shift to the right. The Belize dollar supply curve and the Belize dollar demand curve will shift to the left.Assume that JA$ 1.00 = GUY $ 2.00. In each scenario below you are asked to find the new value of the Jamaican Dollar (JMD). You will always start a new calculation using the original exchange rate given above. Further, you are required to arrive at a possible explanation for each change and illustrate same on a diagram of the market for Jamaican Dollars. (a) The JMD depreciates by 1%. (b) The JMD depreciates by 3% (c) The JMD appreciates by 2%. (d) The JMD appreciates by 4%.In the last 4 years, the exchange rate Pound to Euro depreciated (decreased) to an average of 1.13 (from 1.30 before 2016). When citizens from the UK would go on holidays in a Euro zone country (e.g. Spain), would a lower exchange rate of 1.13(Sterling Pound to Euro) instead of an exchange rate of 1.30 (Pound to Euro) be of advantage or disadvantage for British tourists in Europe? Explain.
- makes it harder to compare lira amounts from different times. We use _ to adjust figures so that they can be compared. For example, in September 1998 1 USD was 0.21 liras. Today the exchange rate is 8.5 liras to 1 USD. Was the Turkish lira really that much more valuable in 1998 than it is now? (If you do the inflation correction you will see that the lira was indeed 15% more valuable against the US dollar back then as compared to its current value.) A) Economic growth, the real GDP B) the CPI, inflation C) Inflation, the CPI D) Unemployment, the GDP Deflator E) Changes in prices, inflationAssume that when digging to plant flowers at the backyard of college in northern Ireland a very rich vein of gold is discovered . If the government (a)monetises (b) sterilises this windfall how will the pound sterling to Euro exchange rate be affectedAssume Switzerland has a one-year interest rate of 3% and that of Ghana is 16%. If the International Fisher Effect (IFE)holds, what would you forecast for the Swiss franc exchange rate with respect with the cedi be for a one-year period? Assume that the initial exchange rate is 5000cedis to a Swiss franc.
- Suppose $2, 400 CAD could be used to purchase $2, 086.96 USD last year. Part (a): What was the nominal exchange rate last year? Be sure to quote your answer in the proper format (example: CAD = 1 USD). Roud your answer to the nearest cent (two decimal places: 0.50). Part (b): This year, if the exchange rate is $1.02 CA) = $1 USD, has the USD experienced a nominal appreciation or a nominal depreciation? Part (c): How will this change to the nominal exchange rate impact Canada's NX levels? Use a few sentences to explain how you arrived at this conclusion.(b) Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. (i) What is the nominal exchange rate? Use the expression: ereal= enor*P / Pfor where ereal is real exchange rate, enor is nominal exchange rate, P is domestic price level and Pfor is foreign price level. (ii) Suppose the real exchange rate rises by 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change?Sri Lanka Rupee (SLRs) fluctuates in recent times due to its economic situation. The Sri Lanka Rs trading in December 2020 at SLRs 181.5/$. The Sri Lanka Rs. is expected to appreciate by 7% in 2021. a) What will be the exchange rate after appreciation of the Sri Lankan currency? b) What will be the percentage change of Sri Lanka currency if, on March 31, 2021, it is trading at SL Rs 179.9/$?
- 2) Exchange rates and interest rates are connected through the parity conditions. Let the New Zealand interest rate be 5% per annum, the US interest rate be 10% per annum, the spot exchange rate be 0.8USD/1 NZD, and the one year forward exchange rate to be 0.85USD/1 NZD. a) What is the return, in NZD, a New Zealand financial trader would get if they invested 1 NZD in New Zealand? b) What is the return, in NZD, an New Zealand financial trader would get if they invested 1 NZD in the US? [Hint: you'll have to exchange that NZD for USDI] c) As you should find, the values given mean the parity condition does not hold. Given the interest rates are fixed, what will happen to the value of the spot exchange rate now? Think about this in terms of demand and supply for the NZD in the FOREX market, and you may draw out a diagram if you wish. d) Now repeat c) for the change in value of the forward exchange rate.Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. Initially, the supply curve for USD is 100+e, bln dollars per week and the demand curve is 140 - e„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-e and the supply of dollars falls to 99+ e N' How should the central bank of Mexico react to this change? O A. start selling U.S. dollars to support the exchange rate O B. start buying U.S. dollars to support the exchange rate O C. reduce money supply in the economy O D. do nothing QUESTION 4 bln dollars per week and the demand curve is 155 -e bln dollar Using information from problem 3, suppose that the financial crisis worsens and now the supply curve for USD is 91+e.…Suppose that today the exchange rate between the U.S. dollar and the Chinese yuan is $1 = 6.2 yuan. If next week the exchange rate is $1 = 7 yuan, it is clear that: A)The yuan has depreciated relative to the dollar. B)The dollar has depreciated relative to the yuan. C)The dollar has appreciated relative to the yuan. D)Both currencies have appreciated