Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 11, Problem 4MC
To determine
Currency appreciation.
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Students have asked these similar questions
The Dominican peso started the year at 55 pesos / $1, but then fell to 50 pesos / $1 over the summer.
Was the Dominican peso stronger or weaker against the US dollar?
Did the US dollar appreciate or depreciate against the Dominican peso?
If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market?
A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate.
B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate.
C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate.
D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.
12. Use the Foreign Exchange market for British pounds to answer the following. Suppose
that the British demand for US goods increases. The result is that:
A) the demand for pounds increases.
B) the demand for pounds decreases.
C) the supply of pounds decreases.
D) the supply of pounds increases.
13. Use the Foreign Exchange market for British pounds to answer the following. Suppose
that the British demand for US goods decreases. The result under a flexible exchange rate
regime is that:
A) the demand for pounds increases.
B) the demand for pounds decreases.
C) the $/£ exchange rate decreases.
D) the $/£ exchange rate increases.
Chapter 11 Solutions
Managerial Economics: A Problem Solving Approach
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Similar questions
- Please label your answers to the following questions clearly. (a) Outline two factors that affect the demand for a currency and two factors that affect its supply. (b) Imagine that the diagram below respresents the market for the Australian Dollar. Refer to this diagram in explaining what would happen to the value of the Australian Dollar if Australia suddenly experienced an increase in its inflation rate relative to that of its trading partners. ER SAUD ER, DAUD Quantity of AUDarrow_forwardLet's say that Americans and others expect the dollar to depreciate. As a result, in the short run, in the market for dollars we'd expect A. the supply of dollars to shift to the right and the nominal exchange rate to rise B. the supply of dollars to shift to the right and the nominal exchange rate to fall C. the supply of dollars to shift to the left and the nominal exchange rate to fall D. the supply of dollars to shift to the left and the nominal exchange rate to rise.arrow_forwardWhich of the following would NOT be a cause for an increased American demand for the Mexican peso? a. Greater economic growth in the United States b. The United States having lower interest rates than Mexico c. The expectation by speculators that the value of the peso is edging up d. Increased American demand for Mexican goodsarrow_forward
- If people expect the British pound to appreciate versus the dollar over the coming year, they will ____, and the pound will____. The US dollar will_____ versus the British pound.A. sell pounds in a year, depreciate in a year, appreciate in a year B. buy pounds today, appreciate today, depreciate today C. buy pounds in a year, appreciate in a year, depreciate in a year D. sell pounds today, depreciate today, appreciate todayarrow_forwardView the data below for the exchange rate between the US dollar and the Japanese yen. How many yen could you get per dollar at the earliest date shown on the chart? Explain. How many yen could you get per dollar at the most recent date shown on the chart? Explain. Has the dollar appreciated or depreciated in value over time? Explain.arrow_forwardSuppose the three-month interest rate in Europe is 2 percent, but the three-month interest rate in the United States is 3 percent. The spot rate of dollar is 0.70 euro = $1, but three-month forward rate is 1 euro= $1.50. Based on this information what can you predict about the foreign exchange market? A. Spot price of dollar may appreciate. B. Spot price of euro may fall. C. European interest rates will certainly fall. D. Forward price of dollar may risearrow_forward
- Answer correctly and explain within 30 mins will give you positive feedback. URGENTarrow_forwardnt. e euro the > ces 6. In the foreign exchange market in which U.S. dollars are exchanged for Mexican pesos, which of the following will occur when the demand for the U.S. dollar increases? a. The dollar will depreciate. b. The peso will appreciate. c. The supply of pesos will shift to the right. The demand for the dollar will shift to the left. e. The real exchange rate will decrease. rates • Discuss th rate regin • Describe exchange Explain h exchangearrow_forwardSomeone please answer this questionIf international speculators lose confidence in foreign economies and want to move some of their wealth into the U.S. economy, then in the short run there is A. a decrease in the value of the U.S. dollar in foreign exchange markets, a lower level of U.S. output and a higher U.S. price level. B. an increase in the value of the U.S. dollar in foreign exchange markets, a lower level of U.S. output and a lower U.S. price level. C. an increase in the value of the U.S. dollar in foreign exchange markets, a higher level of U.S. output and a higher U.S. price level. D. a decrease in the value of the U.S. dollar in foreign exchange markets, a lower level of U.S. output and a lower U.S. price level.arrow_forward
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