The shift in demand curve to the right.

Question

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Answer 1

Question

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

(b)

To determine

The shift in supply curve to left.

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

(c)

To determine

The effect on the balance of trade.

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.

Economics Concept Introduction

Exchange rate: The exchange rate is the rate by which one country’s currency value is expressed with other country’s currency.

Float exchange rate system: It is the current exchange rate system under which the value of most currencies is determined by demand and supply.

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Answer 2

Question

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

(b)

To determine

The shift in supply curve to left.

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

(c)

To determine

The effect on the balance of trade.

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.

Economics Concept Introduction

Exchange rate: The exchange rate is the rate by which one country’s currency value is expressed with other country’s currency.

Float exchange rate system: It is the current exchange rate system under which the value of most currencies is determined by demand and supply.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

(b)

To determine

The shift in supply curve to left.

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

(c)

To determine

The effect on the balance of trade.

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.

Economics Concept Introduction

Exchange rate: The exchange rate is the rate by which one country’s currency value is expressed with other country’s currency.

Float exchange rate system: It is the current exchange rate system under which the value of most currencies is determined by demand and supply.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

(b)

To determine

The shift in supply curve to left.

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

(c)

To determine

The effect on the balance of trade.

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.

Economics Concept Introduction

Exchange rate: The exchange rate is the rate by which one country’s currency value is expressed with other country’s currency.

Float exchange rate system: It is the current exchange rate system under which the value of most currencies is determined by demand and supply.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

(b)

To determine

The shift in supply curve to left.

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

(c)

To determine

The effect on the balance of trade.

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.

Economics Concept Introduction

Exchange rate: The exchange rate is the rate by which one country’s currency value is expressed with other country’s currency.

Float exchange rate system: It is the current exchange rate system under which the value of most currencies is determined by demand and supply.

Answer 6

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

Answer 7

Chapter 20, Problem 2P

(a)

To determine

The shift in demand curve to the right.

Answer 8

(a)

Expert Solution

Explanation of Solution

The phenomena that may shift the demand curve to the right includes an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

(b)

To determine

The shift in supply curve to left.

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

Answer 13

(b)

To determine

The shift in supply curve to left.

Answer 14

(b)

Expert Solution

Explanation of Solution

All of it (an increase in the British interest rate or the U.S. price level, a decrease in the U.S interest rate or the British price level.) causes the supply curve to shift to the left.

Answer 15

(b)

Expert Solution

Answer 16

(b)

Expert Solution

Answer 17

Expert Solution

Answer 18

(c)

To determine

The effect on the balance of trade.

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.

Economics Concept Introduction

Exchange rate: The exchange rate is the rate by which one country’s currency value is expressed with other country’s currency.

Float exchange rate system: It is the current exchange rate system under which the value of most currencies is determined by demand and supply.

Answer 19

(c)

To determine

The effect on the balance of trade.

Answer 20

(c)

Expert Solution

Explanation of Solution

An increase in the British interest rate or a decrease on the U.S. interest rate will decrease the British’s balance of trade as the British goods become relatively more expensive. The change in the interest rate would increase the value of pound and hence will shrink the surplus or increase trade deficit.