QUESTION 2 In the long run, an increase in the nominal exchange rate is likely to lead to Note: Multiple answers are possible. A. an increase in exports B. a decrease in exports C. an increase in imports D. a decrease in imports

QUESTION 2 In the long run, an increase in the nominal exchange rate is likely to lead to Note: Multiple answers are possible. A. an increase in exports B. a decrease in exports C. an increase in imports D. a decrease in imports

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: 3. Find Current Account Balance from the following: Items (i) Export of goods (ii) Export of…

A: Current account is the account which can calculate the value of exports and imports of goods and…

Q: Question: In an economy with a high dependency on tourism, which faces a prolonged period of border…

A: Economic growth: Rise in an economy's ability to produce goods and services over time, often…

Q: What will happen in the medium run to a country under the fixed exchange rate when it is running a…

A: Under the fixed exchange rate system, the exchange rate is determined by the government. There are…

Q: When purchasing power parity is lower than the nominal exchange rate, over time one can expect:…

A: Purchasing power parity is the theoretical exchange rate at which the currency of one country would…

Q: trade surplus (exporting more than importing) and trade deficit (importing more than exporting) on…

A: The ‘balance of trade’ (BOT) is the sum of a country's import and export. The BOT is positive(+)…

Q: If the foreign interest rate increases________? Group of answer choices 1The exchange rate is…

A: Foreign interest rate- It might have a positive or negative effect on foreign bonds or other assets…

Q: A country's____________is the total economic value of all the products that it exports minus the…

A: Exports are the domestic goods and services that are bought by foreign consumers.Imports are the…

Q: Why do exports increase in the long-run when currency depreciates, according to the J-curve? OA.…

A: J-curve is a theory in economics that explains that given certain assumptions when there is…

Q: Section A: Multiple Choice Questions Q5. If the exchange rate rises: a. Exports will rise and…

A: Exchange rates are characterized as the cost of one country's currency comparable to another…

Q: a. Explain why in an economy with fixed exchange rates, monetary policy will not cause expenditure…

A: In the international market, exchange rate can be determined using different systems such as fixed…

Q: If the foreign interest rate increases and U.S. interest rates also increases_______? Group of…

A: If the foreign interest rate increases and U.S. interest rates also increases the exchange rate…

Q: In 2020 the United States had a current account deficit. The current account deficit implies that…

A: In an economy, the deficit can be of four types. The government budget deficit, the balance of…

Q: Assume that policy makers in the home country are pursuing a fixed exchange rate regime and that…

A: The aggregate demand represents the total demand for all goods and services produced in an economy…

Q: A low exchange rate results in Select one: a. The imports of a country increasing b. Cheaper imports…

A: Exchange rate refers to the rate at which two countries make exchange of goods and services. The…

Q: If the productivity or the productivity of the workforce decreases_______? Group of answer choices…

A: An open economy is one whose domestic production and domestic demand affect its currency value in…

Q: The nominal exchange rate is determined primarily by two countries' a. price levels in the short…

A: Exchange rate is the value of one country's currency in terms of another. This is known as the…

Q: If the U.S. interest rate rises, the exchange rate value of the dollar ________ and net exports…

A: Net exports, the difference between exports and imports depend on exchange rate. Appreciation…

Q: Using Diagrams show the impact on a country’s exchange rate when: a. Rise in the domestic price of…

A: a. Rise in the domestic price of exports will increase the export as they are getting higher prices.…

Q: Purchasing power parity may not hold in practice due to

A: Purchasing power parity (PPP): This theory states that the law of one price holds in long run. It…

Q: 5. In a floating exchange rate regime between Japan and the U.S, what happens to the dollar in the…

A: Floating exchange rates imply that monetary standards change in relative worth constantly. For…

Q: Exchange Rates I: The Monetary Approach in the Long Run - Work It Out 7 You are given the following…

A: Foreign exchange rates play a pivotal role in the global economy by determining the relative values…

Q: What impact does a depreciation of a country's currency have on its balance of trade? A. It…

A: The issue is to grasp the effect of a country's money deterioration on its equilibrium of exchange.…

Q: How do the nominal exchange rate and the real exchange rate differ? How do we find the real exchange…

A: The exchange rate is a rate at which one currency is exchanged for another. It helps to find the…

Q: A new country has been established on the moon and created a currency called cheesybits. Which of…

A: Answer: A transaction will be called a foreign exchange transaction if buyers and sellers are from…

Q: A high value of a currency would result in which of the following? Select one: a. Greater…

A: a. This option is incorrect because, due to the high value of a currency, the export will be more…

Q: How does the law of one price adjust exchange rates when inflation in a commodity product like say…

A: The law of one price (P) asserts that in the absence of trade barriers and transportation costs,…

Q: notion of purchasing power parity only holds if…

A: Purchasing power parity means that when exchange rate is applied then cost of good in one country be…

Q: Read the news clip, then answer the following question. A fall in the exchange rate unemployment and…

A: Exchange rate refers to the rate at which the currency of one nation can be exchanged with the…

Q: In the long run, exchange rates are typically affected by A. bond investors who seek long-term…

A: The exchange rates, in the long run, are affected by the bond investors seeking long-term returns.…

Q: Define the following terms. a. Trade b. Nominal Exchange rate c. Real Exchange rate d. Absolute…

A: The economics is the social science that study how the individual allocates their scarce resources…

Q: The quantities of goods and services exported and imported are recorded in the balance of payments…

A: Balance of payment:- It is a kind of statement which records all the inflow and outflow of money of…

Q: The economy of Singapore is experiencing high economic growth. How will this growth affect inflation…

A: In an economy, any change in economic growth will affect the domestic market as well as the…

Q: Balance of Payments Exports of goods Imports of goods Exports of services Imports of services Net…

A: The difference between the valuation of exports and imports in an economy over a specific period,…

Q: The nominal exchange rate for yen to dollars is 200.30 and the PPP is 167.8. Work out the real…

A: The real exchange rate is a measure of the relative prices of goods and services between two…

Q: Suppose that the real exchange rate between Canada and Tanzania is defined in terms of baskets of…

A: This can be described as a concept that shows an increase in the real exchange rate means that a…

Q: According to the economic theory, growth in a country's exports results in appreciation of the…

A: A rise in the demand for the domestic currency bids up its value in the international currency…

Q: If New Zealand's inflation rate is 5% inflation vs 10% inflation in our trading partners and the $NZ…

A: The real exchange rate formula is given as: Real exchange rate = nominal exchange rate * (domestic…

Q: The benefits of adopting a flexible exchange rate is that, a.in response to shocks to the demand…

A: In the international market, exchange rate determines the value of goods and services in different…

Q: The advantage of a system of fixed exchange rates over one where exchange rates are flexible is that…

A: Fixed Rate System. In a fixed exchange rate system, the value of a currency is locked into (pegged)…

Q: In the international trade, exchange rate might affect export and import. Explain briefly how the…

A: Answer to the question is as follows:

Q: What is likely to happen to the exchange rate in a small open economy that engages in trade policy…

A: The exchange rate means the value of one currency in terms of another currency which is determined…

Q: If the value of exports are 11,000 and value of imports are 1500 find the balance of trade?

A: Generally in the given question Value of exports are given as = 11000 And value of imports are =…

Q: If the prices in the United States rise faster than in Japan, a. then interest rate parity must…

A: The price of a nation's currency in relation to the currency of another country is referred to as…

Q: a. What is purchasing power parity and how is it related to the law of one price? b. Is it…

A: What is macroeconomic long and short run? In macroeconomic terms, the long run is the length of time…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Why does purchasing-power parity theory NOT hold at all times? Select one: a. because prices are different across countries b. because wages are higher in some countries and lower in others c. because some goods and services cannot be traded d. because countries use different currencies
Determine which account of the Balance-of-Payments is affected by the following transaction: You invest in a foreign stock market by buying US$500 in stock. Select one: a. Current Account - Transfers a. Current Account - Transfers b. Current Account - Imports b. Current Account - Imports c. Current Account - Exports c. Current Account - Exports d. Capital Account - Portfolio Investment d. Capital Account - Portfolio Investment e. Capital Account - Foreign Direct Investment
If other things are held constant, an increase in Kazakhstan's export will a. Tend to cause tenge to depreciate because the supply of tenge will decline b. Tend to cause tenge to depreciate because the supply of tenge will rise C. Have no effect on tenge value d. Tend to cause tenge to appreciate because the demand for tenge will rise e. Tend to cause tenge to appreciate because the supply of tenge will rise
None
Purchasing power parity holds A. Weakly in the short and long run B. Stronger in the short run and weaker in the long run C. Weaker in the short run and stronger in the long run D. Strongly in the short and long run
If the demand for the goods that we export increases______?Group of answer choices 1The exchange rate is unaffected. 2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates). 3The exchange rate increases (the US $ appreciates). 4The exchange rate decreases (the US $ depreciates).
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
1. There are several reasons Purchasing Power Parity may not hold in reality. Among those reasons are: (Mark ALL that apply) A. The exact quality of goods varies between countries B. Some goods are not tradeable. C. Some countries have tariffs or other trade barriers. D. People's tastes vary between countries.
When the relative price of a country’s goods is high, then over time the relative price tends to_____ and the country’s currency _______. a. rise, appreciates b. rise, depreciates c. fall, appreciates d. fall, depreciates A temporary increase in transportation costs between the US and the UK that cause the relative price of US goods to jump, will cause international investors to expect a future ______of the dollar that causes US real interest to _______those in the UK. a. appreciation, exceed b. appreciation, be less than c. depreciation, exceed d. depreciation, be less than
If foreigners want to invest more in the American economy______?Group of answer choices 1The exchange rate increases (the US $ appreciates). 2The exchange rate is unaffected. 3The exchange rate decreases (the US $ depreciates). 4The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates).
If New Zealand's inflation rate is 25% inflation vs 15% inflation in our trading partners and the $NZ depreciates by 5% then Select one: a.the real exchange rate cannot be calculated. b.the real exchange rate is unchanged. c.the real exchange rate falls. d.the real exchange rate rises.
If the real exchange rate is 2.0, the price level of domestic goods is 120, and the dollar price of foreign exchange is 0.4, what is the price level of foreign goods? Select one: a. 600 b. 50 c. 100 d. 200 e. 400