Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 22, Problem 2QP
To determine
Relation between the dollar price of peso with the quantity demanded and quantity supplied of pesos.
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How will a peso devaluation affect businesses and consumers in other countries and the Philippines?
What does it mean to say that the U.S. dollar has depreciated in value in relation to the Mexican peso? What does it mean to say that the Mexican peso has appreciated in value relative to the U.S. dollar?
Explain verbally how the following condition would be expected to change the demand and/or
supply of Mexican Pesos and how it affects the value of the Mexican Peso, everything else equal.
Mexico's interest rates rises, while inflation is expected to remain low.
Chapter 22 Solutions
Macroeconomics
Ch. 22.2 - Prob. 1STCh. 22.2 - Prob. 2STCh. 22.2 - Prob. 3STCh. 22.2 - Prob. 4STCh. 22.3 - Prob. 1STCh. 22.3 - Prob. 2STCh. 22.3 - Prob. 3STCh. 22.3 - Prob. 4STCh. 22 - Prob. 1QPCh. 22 - Prob. 2QP
Ch. 22 - Prob. 3QPCh. 22 - Prob. 4QPCh. 22 - Prob. 5QPCh. 22 - Prob. 6QPCh. 22 - Prob. 7QPCh. 22 - Prob. 8QPCh. 22 - Prob. 9QPCh. 22 - Prob. 10QPCh. 22 - Prob. 11QPCh. 22 - Prob. 12QPCh. 22 - Prob. 13QPCh. 22 - Prob. 14QPCh. 22 - Prob. 15QPCh. 22 - Prob. 16QPCh. 22 - Prob. 1WNGCh. 22 - Prob. 2WNGCh. 22 - Prob. 3WNGCh. 22 - Prob. 4WNGCh. 22 - Prob. 5WNG
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Similar questions
- During 1995, the Mexican peso exchange rate rose from 5.33 peso/$ to 7.64 peso/$. At the same time, US inflation was approximately 3% in contrast to Mexican inflation of about 48.7%. By how much did the nominal value of the peso change during 1995? By how much did the real value of the peso change over this period?arrow_forwardIf Mexicans go on a spending spree and buy twice asmuch French perfume and twice as many Japanese TVs,English sweaters, Swiss watches, and bottles of Italianwine, what will happen to the value of the Mexican peso?arrow_forwardConsider two similar restaurants in close proximity to each other on either side of the U peso. The following graph shows the supply and demand curves for meals at the restaurant on the U.S. side of the border. On the following graph, shift either the supply curve or the demand curve to represent the effect of the devaluation of the dollar against the peso on the market for meals at the restaurant on the U.S. side of the border. QUANTITY (MEALS) The dollar devaluation harms U.S resturant owner/customersarrow_forward
- Which 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_forwardSuppose that one year ago the spot rate for the British pound was $1.17 per pound, while the spot rate for the peso was $0.65 per peso. The cross rate of the British pound one year ago was £1 = pesos. Suppose that now the spot rate for the British pound is $2.00 per pound, while the spot rate for the peso was $1 per peso. Now, the cross rate of the British pound is £1 = pesos. This represents a percent change in the cross rate of the British pound.arrow_forwardThe 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?arrow_forward
- Over the past 20 years, Brazil has experienced relatively high inflation while Japan has experienced relatively low inflation. What do you think has happened to the number of Brazilian reais a person can buy with a Japanese yen?arrow_forwardExplain why the U.S. demand for Mexican pesos is downward-sloping and the supply of pesos to Americans is upward-sloping. Indicate whether each of the following would cause the Mexican peso to appreciate or depreciate: The U.S. economy moves into a severe recession.arrow_forwardThe difference between the amount we spend to import products from other countries and the amount we make when we export products to other countries is called the balance of trade. Why would the balance of trade affect the value of the US dollar? Is it better to import more or to export more? Why?arrow_forward
- If Japan has low inflation and the Philippines has high inflation, what will happen to the exchange between the Japanese yen and the Philippine peso?arrow_forwardPlease 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_forwardIn the picture below is the table to the question. The highlighted one is my guess which is wrong. Based on the Exchange rates above, which currency has become stronger or appreciated against the dollar? A)US Dollar B)British Pound C)Mexican Peso(this one is wrong) D)Candian Dollararrow_forward
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