Using information from problem 3, suppose that the financial crisis worsens and now the supply curve for USD is 91+ e. bln dollars per week and the demand curve is bln dollars per week. The central bank still commits to its pledge to support the exchange rate if Peso depreciates by over 20% from the original level (more 155 - e specifically, in this case the fixed exchange rate will be 20% higher than the original level). To maintain the fixed exchange rate, the central bank will have to spend billion dollars of foreign exchange reserves per week. Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol "%". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99".

Using information from problem 3, suppose that the financial crisis worsens and now the supply curve for USD is 91+ e. bln dollars per week and the demand curve is bln dollars per week. The central bank still commits to its pledge to support the exchange rate if Peso depreciates by over 20% from the original level (more 155 - e specifically, in this case the fixed exchange rate will be 20% higher than the original level). To maintain the fixed exchange rate, the central bank will have to spend billion dollars of foreign exchange reserves per week. Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol "%". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99".

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q2-12 When considering the change in price of a country's imports when foreign currencies depreciate by 10% relative to the home country, the "elasticity of exchange rate pass-through" would be equal to Select one: a. 1.0 if there were no "pass-through." b. 1.0 if there were complete "pass-through." c. zero if there were complete "pass-through." d. 10% if there were complete "pass-through."
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