Suppose the fixed exchange rate is $0.50 per mark. Suppose that a recession in the United States leads to a reduction in imports from Germany.On the following graph, shift the relevant curve or curves to illustrate the described changes. Then use the black points (cross symbol) to indicate theimbalance.1.00Supply for marksDemand for marks0.75Supply for marks0.50The Imbalance0.25Demand for marks41216QUANTITY OF MARKS (Millions)A recession in the United States leads to a reduction in imports from Germany. As a result, the demand for German markscausing amillion imbalance in the U.S. balance of payments.Under the gold standard, how is the fixed exchange rate maintained in the face of the balance-of-payments imbalance shown on the previous graph?The IMF must lend marks to the United States with which to buy dollars.The IMF must lend dollars to Germany with which to buy marks.Gold must flow from the United States to Germany.o Gold must flow from Germany to the United States.PRICE OF A MARK (In Dollars)

If the situation of recession hits the U.S economy, then it leads to reduction in imports from…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 1 The price of a good is $5.56 in the USA and £4.42 in Britain and the exchange rate is £0.98. If you purchase a good from the UK, then how many goods from the US do you forgo purchasing? (Round to the nearest hundredth.) QUESTION 2 The price of oil is $5.83 in the USA and £4.73 in Britain and the exchange rate is £0.85. You have an oil budget of $39 and want to buy as much oil as possible. What is the maximum amount of oil you can afford? (Round to the nearest hundredth.)
The graph below depicts the foreign exchange market of a hypothetical economy. Exchange rate XR₂ XR₁ XR₂ Q₂ Q₁ Q₂ Quantity of dollars S₂ S₂ Multiple Choice D₂ The shift in the supply curve from S₁ to S3 is caused by. an increase in investors' confidence in foreign economies investors find it is risky to invest in other countries compared to Canada a high Canadian Interest rate relative to foreign interest rate Canadian consumers preferring domestic goods
3. The balance of payments The following table shows a hypothetical balance-of-payments statement for the United States. All figures are in billions of dollars. Complete the table by filling in the missing cells. Balance of Payments (Billions of U.S. dollars) Current Account Goods and Services Exports 200 Goods and Services Imports -280 Trade Balance Income (net) Current Account Balance Capital Account U.S. Capital Inflow U.S. Capital Outflow Capital Account Balance Statistical Discrepancy 98 -62 10 According to the table, the United States is running a trade The net balance of payments equals $ billion.
"Roman Abramovitch" lecture: you must answer all questions. Displayed above is the (spot) foreign exchange market for the pound sterling and the GIG, the national currency of the country High Tech. At the initial equilibrium point X, 1 Pound 5 Gigs. Please answer the following questions: GIGS S₂ = 1 X O Z Se= DGIGS SE = DGIGS DE = SGIGS DE = SGIGS Billions of Pounds 1. Why does the supply curve for pounds slope upward? 2. Starting from an initial equilibrium of point X, consider a new, 5 billion pounds of capital inflow to High Tech. Under what situation would the new equilibrium be at point Y versus point Z? 3. Compare the (numerical) size of the monetary base or high-powered Money (Mo) at points X and Z. 4. If we knew that the money multiplier equals 2 and that the central bank of Freedonia had fully sterilized the capital inflow, could we estimate by how much real GDP would increase? 5. If the central bank decided instead not to sterilize, would the nominal or real gig exchange rate…
A. Canada produces natural resources (coal, natural gas, and others), the demand for which has increased rapidly as China and other emerging economies expand. i. Explain how growth in the demand for Canada's natural resources would affect the demand for Canadian dollars in the foreign exchange market. Explain how the supply of Canadian dollars would change. ii. iii. Explain how the value of the Canadian dollar would change. iv. Illustrate your answer with a graphical analysis. 1
According to a survey ("Big MacCurrencies," The Economist, April 17th 1993), in 1993, the average price of a Big Mac in the U.S. was $2.28. In Japan, Big Mac fans had to fork out ¥391 for this feast. What was the PPP implied exchange rate between the $ and the ¥?
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