Homework Help is Here – Start Your Trial Now!
Business
Economics
Suppose the U.S. dollar depreciates by 6% against the U.K. pound. The following table shows the elasticities of demand in the United States and the United Kingdom. (Note: Throughout this analysis, assume that only the United States and the United Kingdom are relevant countries.) The United States' demand elasticity for imports The United Kingdom's demand elasticity for exports from the United States Given that the sum of these elasticities of demand is less than will worsen the U.S. trade position. Elasticity 0.2 0.3 1.0, the elasticity approach predicts that the depreciation of the U.S. dollar Use the elasticity approach for the remainder of this problem to confirm or refute its prediction about the U.S. trade position as a result of the dollar depreciation. Assume the prices of imports remain constant in terms of foreign currencies. This means the 6% depreciation of the dollar results in a 6% increase in the price of imported goods to the United States, but the dollar price of exports remains constant.

Suppose the U.S. dollar depreciates by 6% against the U.K. pound. The following table shows the elasticities of demand in the United States and the United Kingdom. (Note: Throughout this analysis, assume that only the United States and the United Kingdom are relevant countries.) The United States' demand elasticity for imports The United Kingdom's demand elasticity for exports from the United States Given that the sum of these elasticities of demand is less than will worsen the U.S. trade position. Elasticity 0.2 0.3 1.0, the elasticity approach predicts that the depreciation of the U.S. dollar Use the elasticity approach for the remainder of this problem to confirm or refute its prediction about the U.S. trade position as a result of the dollar depreciation. Assume the prices of imports remain constant in terms of foreign currencies. This means the 6% depreciation of the dollar results in a 6% increase in the price of imported goods to the United States, but the dollar price of exports remains constant.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

I am struggling with what formula to use.

CENGAGE MINDTAP Homework (Ch 13) 3. Currency depreciation and the elasticity approach Suppose the U.S. dollar depreciates by 6% against the U.K. pound. The following table shows the elasticities of demand in the United States and the United Kingdom. (Note: Throughout this analysis, assume that only the United States and the United Kingdom are relevant countries.) The United States' demand elasticity for imports The United Kingdom's demand elasticity for exports from the United States Given that the sum of these elasticities of demand is less than will worsen the U.S. trade position. Elasticity 0.2 Q Search this course 0.3 1.0, the elasticity approach predicts that the depreciation of the U.S. dollar Use the elasticity approach for the remainder of this problem to confirm or refute its prediction about the U.S. trade position as a result of the dollar depreciation. Assume the prices of imports remain constant in terms of foreign currencies. This means the 6% depreciation of the dollar results in a 6% increase in the price of imported goods to the United States, but the dollar price of exports remains constant.
Transcribed Image Text:CENGAGE MINDTAP Homework (Ch 13) 3. Currency depreciation and the elasticity approach Suppose the U.S. dollar depreciates by 6% against the U.K. pound. The following table shows the elasticities of demand in the United States and the United Kingdom. (Note: Throughout this analysis, assume that only the United States and the United Kingdom are relevant countries.) The United States' demand elasticity for imports The United Kingdom's demand elasticity for exports from the United States Given that the sum of these elasticities of demand is less than will worsen the U.S. trade position. Elasticity 0.2 Q Search this course 0.3 1.0, the elasticity approach predicts that the depreciation of the U.S. dollar Use the elasticity approach for the remainder of this problem to confirm or refute its prediction about the U.S. trade position as a result of the dollar depreciation. Assume the prices of imports remain constant in terms of foreign currencies. This means the 6% depreciation of the dollar results in a 6% increase in the price of imported goods to the United States, but the dollar price of exports remains constant.
Homework (Ch 13) Use the elasticities of demand from the previous table to compute the change in the quantity of imports demanded by U.S. consumers as a result of the price increase. Then compute the change in the quantity of U.S. exports demanded by the United Kingdom as a result of the dollar depreciation. Enter these values in the third column of the following table. (Hint: Use the minus sign to indicate a negative value, if necessary.) Sector Imports Exports Net Exports Change in Dollar Price Change in Quantity Demanded Net Effect for the United States (Percent) (Percent) (Percent) 6 0 You can compute the net effect of the 6% depreciation of the dollar for U.S. imports and exports by adding the percentage change in price and quantity. Compute the net effect on U.S. imports, exports, and net exports. Enter these values into the final column of the previous table.
Transcribed Image Text:Homework (Ch 13) Use the elasticities of demand from the previous table to compute the change in the quantity of imports demanded by U.S. consumers as a result of the price increase. Then compute the change in the quantity of U.S. exports demanded by the United Kingdom as a result of the dollar depreciation. Enter these values in the third column of the following table. (Hint: Use the minus sign to indicate a negative value, if necessary.) Sector Imports Exports Net Exports Change in Dollar Price Change in Quantity Demanded Net Effect for the United States (Percent) (Percent) (Percent) 6 0 You can compute the net effect of the 6% depreciation of the dollar for U.S. imports and exports by adding the percentage change in price and quantity. Compute the net effect on U.S. imports, exports, and net exports. Enter these values into the final column of the previous table.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Currency
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.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS