Imagine you have access to a technology that allows you to instantaneously travel to a McDonald’s in any country in the world. For each of the scenarios below, answer whether it makes you more or less likely to buy a Big Mac in the United States. 5 (a) Brazil places tariffs on US products, limiting imports from America. (b) The US becomes a much riskier place to invest because of widespread political unrest. (c) Firms in the UK become much more profitable than those in the US. (d) The global economy surges, sparking higher consumption everywhere in the world. (e) Japan’s central bank cuts interest rates in that country. (f) Mexico’s firms do a much better job of marketing their products to the United States.
Imagine you have access to a technology that allows you to instantaneously travel to
a McDonald’s in any country in the world. For each of the scenarios below, answer
whether it makes you more or less likely to buy a Big Mac in the United States.
5
(a) Brazil places tariffs on US products, limiting imports from America.
(b) The US becomes a much riskier place to invest because of widespread political
unrest.
(c) Firms in the UK become much more profitable than those in the US.
(d) The global economy surges, sparking higher consumption everywhere in the world.
(e) Japan’s central bank cuts interest rates in that country.
(f) Mexico’s firms do a much better job of marketing their products to the United
States.
The price of dollar with relation the currency of other nations can be determined in the foreign exchange market because of the changes in the demand and supply for dollars. When there is an increase in the variable, there is an increase the supply of dollars at an exchange rates, it leads to a rightward shift of the supply curve for dollars. When there is an increase in a variable, there is an increase in the demand for dollars leading to a rightward shift of the demand curve.
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