The price of a laptop in Canada is C$1,000.The price of a car in Germany is 10 000 euros.The current exchange rate is 0.9 euros perCanadian dollar.If a laptop is exported from Canada toGermany with no barriers to trade, what willbe the price of the laptop in Germany?If a car is imported to Canada from Germanywith barriers to trade, what will be the priceof the car in Canada?Suppose the Canadian dollar appreciates by10 percent against the euro. What will be theprice of a computer exported from Canadachange in Germany?Suppose the Canadian dollar appreciates by10 percent against the euro. What will be theprice of a car imported to Canada fromGermany change in Canada?

International trade refers to the buying and selling of goods and services across the borders. The…

Answered: The price of a laptop in Canada is…

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 the representative basket of European goods costs 120 euros and the representative U.S. basket costs $155, and the dollar/euro exchange rate is $0.75 per euro. Calculate the price of the European basket in terms of U.S. baskets.
1 Suppose that two countries, Indonesia and Vietnam, produce coffee. The currency unit used in Indonesia is the Rupiah (IDR). The currency unit used in Vietnam is the Dong (VND). In Vietnam, coffee sells for 4,500 dong (VND) per pound. The exchange rate is 1.57 VND per 1 IDR, EVND/IDR = 1.57. 2 If the law of one price holds, what is the price of coffee in Indonesia, measured in Rupiah (assume we are talking about the same type of coffee)? Please round your answer to the nearest whole number. Assume the price of coffee in Indonesia is actually 3000 IDR per pound. Compute the relative price of coffee in Indonesia versus Vietnam (round your answer to 2 decimal places). Where will coffee traders buy coffee? Where will they sell coffee in this case? How will these transactions affect the price of coffee in Vietnam? In Indonesia?
QUESTION 3 As trade distortions such as tariffs and quotas in a small country are removed, dead weight losses will decrease, hence increasing national welfare. deadweight losses will increase, hence decreasing national welfare. government tariff revenue will increase, hence increasing national welfare. government tariff revenue will decrease, hence decreasing national welfare. QUESTION 4 If the exchange rate for the US dollars and the Swiss francs (SF) is SF1.5 = $1 and then goes to SF1.52 = $1: The dollar depreciates and the franc appreciates. The dollar appreciates and the franc stays the same. The dollar appreciates and the franc depreciates. The dollar stays the same and the franc appreciates.
Coffee grown in Guatemala is priced at 19 Guatemalan quetzal per pound (Guatemalan quetzal, or GTQ, is the currency of Guatemala). Comparable coffee grown in the U.S. is priced at $6.20 per pound. One Guatemalan quetzal trades for $0.13 in the foreign exchange market. Find the real exchange rate from the perspective of the United States and from the perspective of Guatemala, and determine which country's coffee is more competitively priced? Instructions: Enter your responses rounded to two decimal places. Real exchange rate from the perspective of the U.S. is ☐ Real exchange rate from the perspective of Guatemala is Coffee is more competitively priced in (Click to select)
If a Japanese car costs P*=1,000,000 yen, a similar American car costs P= 20,000, and a dollar can buy 100 yen, e= 100 yen/$. Car is assumed to be identical and japan is next door to New Hampshire for simplicity: a. What is the real exchange rate? In which country is car more expensive? b. From which country would you buy and which country would you sell?
Consider a small open economy producing a good which is an imperfect substitute for a foreign good. There are five categories of agents: firms, households, commercial banks, the central bank, and the government. The world price of the foreign good is taken as exogenous and normalized to unity. The nominal exchange rate, E, is flexible. The supply of the domestic good is given by (1) ys* y* (po)* Where Pº is the price of the domestic good and Y³=dY²³ /d PD > 0 Investment, I, is financed by bank loans and is defined as (2) 1=() Where is the loan rate and I' 0 is a constant coefficient. The demand for foreign deposits depends on the domestic and foreign interest rates: (5) ED* /F" =h(*). Where Fo" is the predetermined component of household financial wealth, Esthe nominal exchange rate at the beginning of the period, the interest rate on domestic deposits, į" the interest rate on foreign deposits, and he is a share function with partial derivatives ah/ai0. Household consumption spending,…
If the Canadian dollar appreciated by C$0.004 relative to the US dollar, what would be the new value of the Canadian dollar per US dollar? Assume the current exchange rate was US$1 = C$0.9556. $0
Suppose that the euro is trading at $1.50 per euro in the foreign exchange market. Next, suppose that the exchange rate falls to $1.26 per euro, due to falling interest rates in the eurozone. The following graph shows the supply and demand curves for dollars in the foreign exchange market. On the following graph, shift either the supply curve for dollars or the demand curve for dollars to reflect the influence of "carry trade" (in isolation from other factors that may affect the exchange rate) on the exchange rate for dollars. (Hint: Carefully consider which price is measured on the vertical axis and which currency is being measured on the horizontal axis.) PRICE OF DOLLARS (euros per dollar) QUANTITY (dollars) Saly Dollar Solare ?
The same pair of shoes costs $200 in the U.S., 22,000 Japanese Yen, £130 British pounds and 190 Euros. What are the Yen/$, £/$ and €/$ exchange rates if the Law of One Price holds?
An explosion of education levels causes Europeans' incomes to increase. How would this event impact the foreign exchange market for Euros? the dollar price of Euros decreases and the quantity of Euros increases the dollar price of Euros decreases and the quantity of Euros decreases the dollar price of Euros increases and the quantity of Euros increases the dollar price of Euros increases and the quantity of Euros decreases
Answer the followings: 1. A depreciation of the dollar on the foreign exchange market would result in: A) a decrease in the dollar prices paid by U.S. importers. B) foreign holidays for U.S. residents to be less expensive. C) a decrease in the demand for U.S. exports. D) an increase in the foreign currency prices paid for U.S. exports. 2. The exchange rate for one U.S. dollar is 1.2 Euros and 1.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 0.9 Euro and 1.7 British pounds. We can say: A) the dollar has depreciated relative to both British pounds and Euros. B) the dollar has appreciated relative to both British pounds and Euros. C) the dollar has appreciated relative to Euros and depreciated relative to British pounds. D) the dollar has appreciated relative to British pounds and depreciated relative to Euros. 3. The cost of a trip to New York, US, was $5000. Two weeks later, the US dollar appreciated against the British pound. If the price of the…
Which of the following creates a supply of Japanese yen in foreign exchange markets? Multiple Choice A Canadian student purchases a new Japanese car. A Canadian goes on a business trip to Japan. A Japanese company sells an insurance policy to a Canadian citizen. A Japanese tourist takes a trip to the Canadian Rockies. A Japanese investor receives dividends on some Canadian stock,

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