Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 31, Problem 5QR
To determine
Impact of printing new currency in exchange rate.
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Chapter 31 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- Some countries, many being developing countries, peg their currency to the US dollar. What effect does a rapid appreciation or devaluation of the dollar have on those countries? If you were an exporter from an emerging country to the United States would you prefer a strong or weak dollar?arrow_forwardIf the price of one gallon of gasoline goes down from $4.07 per gallon to $3.99 per gallon, how will that affect the value of the US dollar? Why does it affect the value of the dollar?arrow_forwardIf the chair of the U.S. Federal Reserve Board warns of an overheating economy, what will happen to the dollar? Why?arrow_forward
- The popularity of the leader of a nation can affect the value of their currency. If the President of the United States has a good popularity rating with the citizens of the United States, does that make the US dollar stronger or weaker? Why or why not?arrow_forwardWill an increase in attractiveness of the US as a tourist destination DECREASE or INCREASE the value of US dollar?arrow_forwardWhy does the demand for foreign currency falls when its price risesarrow_forward
- You are going to Japan on an exchange trip in a few months and need to turn your dollars into the Japanese currency, the yen. Right now the exchange rate is $1 = 105 yen, but you expect the dollar to appreciate next month and it should be valued at $1= 107 yen. If you exchange $200 for yen today, how many yen will you receive? Explain. If you decide to wait and exchange your dollars when they are worth $1= 107 yen, how many yen will you receive? Explain. Based on this information, should you exchange your money now or wait a few months? Explain.arrow_forwardUse the excel file above to answer the following question. Which countries have a premium value of the dollar?arrow_forwardWhat happens to the exchange rate of a country’s currency when that country experiences high levels of inflation for an extended period of time? How will it affect the flow of that country’s currency in and out of the country? Explain your answers.arrow_forward
- This summer has been very hot. In fact, many crops that need water to thrive have been suffering from dry conditions. Does poor weather, which reduces crop production, make the US dollar weaker or stronger?arrow_forwardTo me I’m on the fence for the dollar being strong. One of the benefits of the dollar being strong means us, US citizens spend less money on imports. Goods produced in foreign countries will be imported for cheaper if the company producing the products currency falls below the dollar. If the dollar keeps strengthening and import prices keep falling US citizens will have more money to spend. Another benefit is cheaper traveling to foreign countries. You will be able to use less US dollars to get more money and goods abroad. A negative of a strong dollar is it will decrease tourism in the US since it will cost more to travel here. Another negative is the exports will become more expensive and international businesses will be hurt if they deal in foreign currencies. Being a citizen in the US it would be great to have a strong dollar, however as a company exporting or partaking in business in a foreign country could potentially harm your business. please help reply to this postarrow_forwardIn recent years, China has helped make its currency ____ by ____ U.S. dollars. stronger; buying stronger; selling weaker; buying weaker; sellingarrow_forward
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