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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Chapter 31, Problem 5QR
To determine
Impact of printing new currency in exchange rate.
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If the Fed started printing large quantities ofU.S. dollars, what would happen to the numberof Japanese yen a dollar could buy? Why
How would each of these events affect the supply or demand for Japanese yen?
A) Stronger U.S. economic growth.
B) A decline in Japanese interest rates.
C) Higher inflation in the United States.
In Belarus, the government doesn’t allow trading of its ruble outside a narrow price range, which greatly overvalues the ruble – there is a price floor on the ruble compared to euros or dollars. Because of the floor, currency trading has dried up – who would want to sell foreign currencies for grossly overpriced Belarusian rubles? A friend of one of my students has a web site designed to overcome rigidities in this market, a sort of Craigslist for currency. People specify amounts they are willing to buy or sell, agree to trade at some price and arrange a meeting place. When they meet, the trade nominally occurs at the official price floor, making the transaction nominally legal; but the person selling rubles makes extra payments to the buyer to lower the price sufficiently so that the trade actually takes place at the equilibrium price. This is one more way in which technology helps markets circumvent imperfections and rigidities.
Q: If the Belarusian government increases…
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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- If a strike takes place in France, making it harder to buyFrench goods, what will happen to the value of the U.S.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_forwardThe 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_forward
- Will 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_forwardYou 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_forward
- why, according to some economists, should canada adopt the U.S dollar as its currency?arrow_forwardRight now (Fall 2022), the US dollar is significantly stronger that it has been during the last few years — it appreciated against most currencies by about 15-20 percent over the period of two years. Looking at two groups of economic agents — US consumers and US producers — how does stronger currency affect any of these two groups? (other things being equal)arrow_forwardUse the excel file above to answer the following question. Which countries have a premium value of the dollar?arrow_forward
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