Let elasticity of demand for exports for a certain country be ex and elasticity of demand for imports is em. Assume that the country devalues its currency. Its balance of payment will almost certainly show an improvement if: a) e => 1 b) ex = e = 1 c) ex = e <1 + e d) ex+em = 1
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- 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 = .1According to the Marshall-Lerner condition, when a country's currency depreciates in real terms its trade balance will improve if Your answer: O elasticity of demand for exports = 0.9; elasticity of demand for imports = -0.4 O elasticity of demand for exports = -0.8; elasticity of demand for imports = -0.3 O elasticity of demand for exports = 0.5; elasticity of demand for imports =- 0.2 O elasticity of demand for exports = 0.3; elasticity of demand for imports = -0.5determine the purchasing power of the country China for aconsumer good that they would buy from their Canadian trading partner. Also, calculate whatCanada’s purchasing power is with a country that they import from. See example below on Coca Colaand Mexico. Purchasing Power Example In the example of the picture, if a Canadian company operating in Mexico were to pay its Mexican employeesthe equivalent of $10/hour CAD (or 100 pesos/hour according to our fictional exchange rate), theMexican employee would actually enjoy greater purchasing power (the ability to acquire 20 colasversus only 10 colas) than his/her Canadian counterparts.
- D 0 Question 15 91000 AERIN Iris Meado Question 16 BRACELETSIALE... Cigarettes and nicotine patches have a positive but small cross-price elasticity. Ceteris paribus, a cigarette tax on consumers would imply that: Ceteris paribus, the Australian dollar nominal exchange rate: O There will be a large movement up the demand and supply curve of cigarettes and demand for nicotine patches would rise by a large amount O Demand for cigarettes would fall and demand for nicotine patches would fall by a small amount O The demand for cigarettes would fall and demand for nicotine patches would rise by a small amount O There will be a small movement up the demand and supply curve of cigarettes and demand for nicotine ches would fall by a large amount UTS O will rise if Australian interest rates fall O will fall if Australian inflation falls relative to inflation in our trading partners will fall if Australian interest rates rise will rise if Australia's trading partners income rises The Eleventh…Explain how changes in the national income of Country A can lead to a repercussion effect ofits trading partner, Country B, of its balance of payment. Illustrate and explain it with anumerical example with a foreign trade multiplier of 0.4.. If a US resident spends $1,000 to buy €880 worth of French burgundy wine, the US balance of payments shows… a) current acct imports of -$1,000 and capital acct exports of +€880 b) current acct imports of -€880 and capital acct exports of -$1,000 c) current acct imports of -$1,000 and capital acct exports of +$1,000 d) capital acct exports of +$1,000 and capital acct imports of -$1,000.
- 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.…If the actual exchange rate for the euro value of the Australian dollar is higher than the exchange rate that would satisfy absolute PPP, which of the following statements is correct? O The Australian dollar is undervalued because its extinal purchasing power exceeds its iternal purchasing power O The Australian dollar is overvalued because its external purchasing power exceeds its internal purchaing power The Australian dollar is undervalued because its internal purchasing power exceeds its external purchasing power O The Australian dollar is overvalued because its internal purchasing power exceeds its external purchasing powerThe Foreign Exchange MarketThe Jamaican dollar experienced a rapid depreciation in the exchange rate during 2020 due to thepandemic's impact on key sectors. The exchange rate in 2020 closed at J$142.65 to US$1.00,after opening the year at J$132.57, resulting in a 7.6 per cent depreciation. As at FridaySeptember 16, 2022, the exchange rate was at approximately $ JA 150 to US $1 Arguments for and against fixed exchange rate.
- The Foreign Exchange MarketThe Jamaican dollar experienced a rapid depreciation in the exchange rate during 2020 due to thepandemic's impact on key sectors. The exchange rate in 2020 closed at J$142.65 to US$1.00,after opening the year at J$132.57, resulting in a 7.6 per cent depreciation. As at FridaySeptember 16, 2022, the exchange rate was at approximately $ JA 150 to US $1.QUESTIONGiven this rapid depreciation of the Jamaican dollar against the US dollar,should the government of Jamaica adopt a Fixed Exchange Rate regime ormaintain the current Floating Rate regime?Outline to answering the question Clear distinction between fixed exchange rate and floating exchange rate, Examples of countries that uses fixed exchange rate regime and those that uses floatingexchange rate regime and Arguments for and against floating exchange rateBetween 1975 and 1995, U.S. infation averaged 5.7% per year, whileinfation in Japan averaged 3.6% per year. At what rate should we expectthe dollar to depreciate against the yen between 1975 and 1995?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