Suppose that one year ago the spot rate for the British pound was $1.17 per pound, while the spot rate for the peso was $0.65 per peso.The cross rate of the British pound one year ago was £1 =pesos.Suppose that now the spot rate for the British pound is $2.00 per pound, while the spot rate for the peso was $1 per peso.Now, the cross rate of the British pound is £1 =pesos. This represents apercent change in the cross rate of the Britishpound.

Answered: Suppose that one year ago the spot rate…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that, under a system of floating exchange rates, Mexicans decide to increase their investments in the United States. As a result, Multiple Choice the peso and the dollar will both depreciate. the peso will depreciate and the dollar will appreciate. the peso and the dollar will both appreciate. the peso will appreciate and the dollar will depreciate.
In the picture below is the table to the question. The highlighted one is my guess which is wrong. Based on the Exchange rates above, which currency has become stronger or appreciated against the dollar? A)US Dollar B)British Pound C)Mexican Peso(this one is wrong) D)Candian Dollar
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Assume that in the United States $1,000 wíll buy the same basket of goods that 20,000 pesos will buy in Mexico. The U.S. dollar/Mexican Peso exchange rate is $0.04 per peso. (a) Is the U.S. dollar overvalued or undervalued? Please explain. (b) Is the Mexican Peso overvalued or undervalued? Please explain. Consider the Purchasing Power Parity theory in your answer. (Only accept typing answers) (Only accept typing answers) (Only accept typing answers)
When you write an exchange rate in terms of how many units of a foreign currency it takes to buy one US dollar, we call that: a)a direct quote b) the real price c) an indirect quote d) a depreciation
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Suppose that, initially, the foreign exchange market between the United Kingdom and Canada is in equilibrium. However, over time, the supply of the Canadian euro shifts to the left, causing the pound to (depreciate/appreciate) against the Canadian euro. Which of the following is a disadvantage of this change in the supply of foreign currency for the United Kingdom? a)UK exporting firms find it easier to sell goods on Canadian markets. b)UK consumers face lower prices on Canadian goods. c)UK exporting firms find it more difficult to compete in the Canadian market. d)UK consumers face higher prices on Canadian goods.

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