EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9780100605930
Author: Blinder
Publisher: YUZU
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Chapter 36, Problem 2DQ
To determine
Effect of dollar appreciation relative to euro.
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Chapter 36 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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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_forwardWhat factors will shift the supply and demand for currency? give type answerarrow_forwardWhy does the demand for foreign currency falls when its price risesarrow_forward
- If the unites States imports more goods from abroad than it exports, foreigner will tend to have a surplus of US dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding effort on foreign investments in the United Statesarrow_forwardWhen US assets are more attractive to foreign investors, what happens to the demand for dollars vs demand for a foreign currency? Demand for US dollars increases (demand curve shifts) At a Phoenix game, 150,000 tickets were sold at $45 a piece, the game was sold out, and some people didn"t get tickets. This says what about the selling price and equilibrium?arrow_forwardDifferentiate between foreign exchange and the foreign exchange rate.arrow_forward
- Suppose there is a change in the expectations regarding the value of the US dollar when compared to the European Euro such that people expect a depreciation in the dollar, show graphically how this change is manifested and discuss the effect on the value of the US dollar. What if the expectation was an appreciation of the US dollar, how would your findings change?arrow_forwardWhich of the following affects the demand for U.S. dollars in the foreign exchange market? Multiple Choice domestic demand for U.S. stocks domestic demand for U.S.-made cars foreign demand for U.S. exports European demand for eurosarrow_forwardSuppose that, initially, the foreign exchange market between the United Kingdom and Canada is in equilibrium. However, over time, the supply of the Canadian euro shifts to the left, causing the pound to (depreciate/appreciate) against the Canadian euro. Which of the following is a disadvantage of this change in the supply of foreign currency for the United Kingdom? a)UK exporting firms find it easier to sell goods on Canadian markets. b)UK consumers face lower prices on Canadian goods. c)UK exporting firms find it more difficult to compete in the Canadian market. d)UK consumers face higher prices on Canadian goods.arrow_forward
- Use the following table, which shows the supply and demand schedules for the euro, to answer the next question. Quantity of Euros Price Supplied 400 360 300 286 267 Multiple Choice $1.10 1.00 0.90 0.80 0.70 O If the U.S. government decides to fix or peg the price of the euro at $1.00, it would have to buy 360 euros. sell 160 euros. buy 100 euros. Quantity of Euros Demanded 100 sell 360 euros. 200 300 400 500arrow_forwardwhy, according to some economists, should canada adopt the U.S dollar as its currency?arrow_forwardIn 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…arrow_forward
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