Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 31, Problem 5PA
Subpart (a):
To determine
The impact of appreciation of US dollar.
Subpart (b):
To determine
The impact of appreciation of US dollar.
Sub part (c):
To determine
The impact of appreciation of US dollar.
Sub part (d):
To determine
The impact of appreciation of US dollar.
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When a country's currency appreciates, is this generally good news or bad news for a country's consumers? Is it generally good or bad news for the country's businesses? Explain your reasoning - try to use examples.
Part C Directions: Answer the remaining two questions (HINT: you may want to refer
back to the lesson).
9. When a currency appreciates, there are always groups, in each country, who benefit from a
stronger currency. What two groups would benefit from the US dollar becoming stronger
(appreciating).
10. When a currency depreciates, there are always groups, in each country, who benefit from a
weaker currency. What two groups who would benefit from the US dollar becoming weaker
(depreciating).
When a country's currency appreciates,
Chapter 31 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- Discuss the Foreign Exchange Markets and its impact on the global economy.arrow_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_forwardDescribe the foreign exchange market and its components.arrow_forward
- Describe how a change in the exchange rate affected your firm. Explain what happened to your price and quantity. How can you profit from future shifts in the exchange rate? How do you predict future changes in the exchange rate?arrow_forwardWhat are the two most plausible reasons why countries become international lenders? What two countries fit those plausible reasons ?arrow_forwardUnder a system of flexible exchange rates, what will correct a deficit in a country's balance of payments? a. an appreciation in the nation's currency b. a decline in the nation’s domestic price level c. a depreciation in the nation's currency d. an increase in the nation’s inflation rate 2. Which of the following would supply Canadian dollars to the foreign exchange market? a. an increase in the number of Canadians going to Las Vegas over the holidays b. an increase in spending due to American tourists in Canada c. the sale of a Canadian corporation to a German investor d. the sale of wheat from Manitoba to a European bakeryarrow_forward
- Which of the following companies would gain from foreign currency depreciation? a. Companies that export goods and services. b. Companies that buy bonds issued by the foreign government. c. Companies that borrow in foreign currency. d. Companies that invest in the foreign equity markets.arrow_forwardwhen a domestic investor buys a foreign asset, the financial account would rise, stay the same or fall?arrow_forwardIf the Japanese yen appreciates against the U.S. dollar a. Americans should find Japanese goods are now less expensive b. Japanese residents would find Japanese goods are relatively less expensive than American goods c. U.S. goods should have an easier time competing against Japanese goods in both countries d. Japanese goods should have an easier time competing against U.S. goods in both countriesarrow_forward
- In 2001, the United Kingdoms economy exported goods worth 192 billion and services worth another 77 billion. It imported goods worth 225 billion and services worth £66 billion. Receipts of income from abroad were 140 billion while income payments going abroad were 131 billion. Government transfers from the United Kingdom to the rest of the world were 23 billion, while various U.K government agencies received payments of 16 billion from the rest of the world. Calculate the U.K. merchandise trade deficit for 2001. Calculate the current account balance for 2001. Explain how you decided whether payments on foreign investment and government transfers counted on the positive or the negative side of the current account balance for the United Kingdom in 2001.arrow_forwardWhat is included in the current account balance?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
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