Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 34.3, Problem 3ST
To determine
Check whether Country U’s dollar is overvalued or undervalued.
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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 ___ .
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…
Coffee grown in Guatemala is priced at 17 Guatemalan quetzal per pound (Guatemalan quetzal, or GTQ, is the currency
of Guatemala). Comparable coffee grown in the U.S. is priced at $8.40 per pound. One Guatemalan quetzal trades for $0.13 in the
foreign exchange market.
Find the real exchange rate from the perspective of the United States and from the perspective of Guatemala, and determine
which country's coffee is more competitively priced?
Instructions: Enter your responses rounded to two decimal places.
Real exchange rate from the perspective of the U.S. is
Real exchange rate from the perspective of Guatemala is
Coffee is more competitively priced in [Guatemala
V
Chapter 34 Solutions
Economics (MindTap Course List)
Ch. 34.2 - Prob. 1STCh. 34.2 - Prob. 2STCh. 34.2 - Prob. 3STCh. 34.2 - Prob. 4STCh. 34.3 - Prob. 1STCh. 34.3 - Prob. 2STCh. 34.3 - Prob. 3STCh. 34.3 - Prob. 4STCh. 34 - Prob. 1QPCh. 34 - Prob. 2QP
Ch. 34 - Prob. 3QPCh. 34 - Prob. 4QPCh. 34 - Prob. 5QPCh. 34 - Prob. 6QPCh. 34 - Prob. 7QPCh. 34 - Prob. 8QPCh. 34 - Prob. 9QPCh. 34 - Prob. 10QPCh. 34 - Prob. 11QPCh. 34 - Prob. 12QPCh. 34 - Prob. 13QPCh. 34 - Prob. 14QPCh. 34 - Prob. 15QPCh. 34 - Prob. 16QPCh. 34 - Prob. 1WNGCh. 34 - Prob. 2WNGCh. 34 - Prob. 3WNGCh. 34 - Prob. 4WNGCh. 34 - Prob. 5WNG
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