Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 13, Problem 2QQ
To determine
The change in the factor that causes the increase in the income under fixed exchange rate.
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Changes in which of the following will cause a change in exchange rates?
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consumer preferences
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real interest rates
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perceptions of economic and political stability
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all of the above
What's the impact on the exchange rate between the US and France if both France and the US increase productivity?
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- After leaving the gold standard system, the exchange rate in terms of gold changed from 100 to 60. Mt textbook expresses it as the reduction in exchange rate. However, I feel that the currency becomes strong given that if I give 60 currencies of a country, I can gain 1 gold instead of 100 currencies. Could you explain what the change from 100 to 6o means?arrow_forwardIt is often believed that the value of the currency of some countries are too low, which gives the firms in those countries an unfair competitive advantage. Econometric evidence indicates that relative PPP does not hold in the short-run, while it does hold in the long-run. a. What does this imply for countries with a fixed exchange rate that is 'unfairly low'? b. Can a country maintain an 'unfair' competitive advantage in the long-run by somehow manipulating its exchange rate? Explain. c. Assume the UK and the US are the only countries in the world. Explain what will happen in the long run to the pound and the nominal interest rate in the UK as a result of a decrease in the expected inflation rate in the UK..arrow_forwardIn some cases, governments will intervene in the currency markets to incresae or decrease the value of the country's currency. Which of the following is an example of direct intervention in foreign exchange markets? A. The European Central Bank lowers interest rates to increase the value of the euro. B. The Japanese government purchasing JPY with USD to increase the value of the Japanese yen. C. China imposing barriers on imports from Europe. D. The U.S. lowers interest rates to decrease the value of the U.S. dollar.arrow_forward
- Type out the correct answer and give proper explanation of each n every option step by step within 50 minutes . Will give you multiple upvotes only for the correct answer . Thank you . Which of the following situations describe a fixed exchange rate regime? A. the value of the domestic currency falls when the domestic interest rate increases B. falling demand for the domestic currency prompts the central bank to buy the currency C. an increase in exports causes increase in the demand for the domestic currency D. government intervention in the oil market increases the demand for foreign currencyarrow_forwardIf 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.arrow_forwardHow does the government intervene in the fixed exchange rate to keep it stable? Explain your answer with the help of Graphs!arrow_forward
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