Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

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Answer 1

Question

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

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Answer the followings: 1. A depreciation of the dollar on the foreign exchange market would result in: A) a decrease in the dollar prices paid by U.S. importers. B) foreign holidays for U.S. residents to be less expensive. C) a decrease in the demand for U.S. exports. D) an increase in the foreign currency prices paid for U.S. exports. 2. The exchange rate for one U.S. dollar is 1.2 Euros and 1.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 0.9 Euro and 1.7 British pounds. We can say: A) the dollar has depreciated relative to both British pounds and Euros. B) the dollar has appreciated relative to both British pounds and Euros. C) the dollar has appreciated relative to Euros and depreciated relative to British pounds. D) the dollar has appreciated relative to British pounds and depreciated relative to Euros. 3. The cost of a trip to New York, US, was $5000. Two weeks later, the US dollar appreciated against the British pound. If the price of the…

Suppose that yesterday, the U.S. dollar-Japanese yen exchange rate was $1=¥0.553546. The price of one Japanese yen in terms of a U.S. dollar was ___ . Suppose that today the U.S. dollar-Japanese yen exchange rate falls to $1=¥0.533585 for one dollar. This means that between yesterday and today, the U.S. dollar has ___ against the Japanese yen. The price of a Mexican peso in terms of the U.S. dollar is now ___ .

Suppose that yesterday, the U.S. dollar was trading on the foreign exchange market at 0.75 eurosper U.S. dollar and today the U.S. dollar is trading at 0.80 euros per U.S. dollar. Which of the twocurrencies (the U.S. dollar or the euro) has appreciated and which has depreciated today?b) Suppose that the exchange rate for the Mexican peso fell from 15 pesos per U.S. dollar to 10 pesosper U.S. dollar. What is the effect of this change on the quantity of U.S. dollars that people plan tobuy in the foreign exchange market?c) Suppose that the exchange rate rose from 80 yen per U.S. dollar to 90 yen per U.S. dollar. What isthe effect of this change on the quantity of U.S. dollars that people plan to sell in the foreignexchange market?

Answer 2

Question

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

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Answer 3

Question

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

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Answer 4

Question

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

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Answer 5

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

Answer 6

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

Answer 7

Chapter 22, Problem 4QP

(a)

To determine

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

Answer 8

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

Answer 9

(b)

To determine

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

Answer 10

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

Answer 11

(c)

To determine

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 22.2 - Prob. 1ST Ch. 22.2 - Prob. 2ST Ch. 22.2 - Prob. 3ST Ch. 22.2 - Prob. 4ST Ch. 22.3 - Prob. 1ST Ch. 22.3 - Prob. 2ST Ch. 22.3 - Prob. 3ST Ch. 22.3 - Prob. 4ST Ch. 22 - Prob. 1QP Ch. 22 - Prob. 2QP

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

Solution Summary: The author explains the difference between currency appreciation and currency depreciation. Inflation rate refers to the percentage change in the price level from the preceding period.

Determine whether it is appreciation or depreciation when the U.S. interest rate is above the Japanese interest rate.

Determine whether it is appreciation or depreciation when the rate of inflation rises in relation to the U.S. inflation rate.

Determine whether it is appreciation or depreciation when there is an increase in U.S. income while no change in Japanese income.

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Chapter 22 Solutions