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- The demand for Australian dollars in the foreign exchange market equals 14000 – 3000e and thesupply of Australian dollars in the foreign exchange market equals 2000 + 2000e, where e is thenominal exchange rate expressed in euros per Australian dollar. If the Australian dollar is fixed at 2euros per Australian dollar, then to maintain this fixed rate, what is the required change in theReserve Bank of Australia’s holdings of euros? 1increase by 4000 euros 2decrease by 2000 euros 3decrease by 4000 euros 4increase by 2000 eurosWhich of the following will dcrease the supply of US dollars in the foreign exchange market? (A) US consumer demand fewer imports (B) Foreigners increase their demand for US goods ©) US residents increase their travel abroad Foreign Investors see increased investment opportunities in the USA decrease in the real exchange rate has the effect of O a. decreasing demand O b. Increasing net export O c. Deficit in trade O d. Decreasing net export
- E1 The higher the value of e, the ______________(More or less) units of foreign currency a dollar buys. When a nominal exchange rate goes up, we say the domestic currency is _________(appreciating or depreciating) against the foreign currency. When a nominal exchange rate goes down, we say that the domestic currency is _________(depreciating or appreciating) against the foreign currency.Today it costs $1.25Cdn to buy $1US. Suppose tomorrow US interest rates rise. What would happen to the foreign exchange rate between Canadian and US dollars? Explain why.6. How is the United States net foreign wealth affected by a depreciation of the US Dollar?
- Exchange Rates Table YEAR 2014 2015 2016 US $ $1 $1 $1 British Pound .85 .7 .6 Based on the Exchange rates above, Which of the following is true? O The dollar is growing stronger against the pound The dollar is more expensive in pounds and is appreciating O More pounds are needed to buy a dollar, so the dollar is appreciating O The dollar is less expensive in pounds and is depreciatingThe nominal ekchange rate is defined as the price of domestic currency in terms of foreign currency From the perspective of the United States, an increase in the nominal exchange rate will cause which of the following? O American goods are less expensive than foreign goods O Forelen currency is more expensive than the dollar. O The dollar becomes more experisive than foreign currency O Foreign goods are more expensive than American goods.1. With floating exchange rates, depreciation of a country's currency will, ceteris paribus, lead to: a. an increase in its net exports and net capital inflow. b. equal and offsetting changes in net exports and net capital inflow in either direction c. a fall in its net exports and net capital infow d. an increase in net exports and a fall in net capital inflow 2. Donald used to work full-time, but is now working only 5 hours a week so that he can spend more time learning Spanish. Which of the following is correct as measured by the national statistical office? a. The under-employment rate has increased b. The unemployment rate has increased. c. The participation rate has decreased d. The unemployment, participation and under-employment rates have all remained the same. 3. Ceteris paribus, the Australian dollar nominal exchange rate: a. will rise if Australian interest rates fall b. will fall if Australian inflation falls relative to inflation in our trading partners c. will rise…
- Give typing answer with explanation and conclusion Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. Initially, the supply curve for USD is 100 + eN bln dollars per week and the demand curve is 140 - eN bln dollars per week. There is a financial crisis in Mexico and the government fears that it may lead to capital outflows that would make the crisis even worse. They decide that if Mexican Peso depreciates by more than 20% the central bank will step in and fix the exchange rate. As the crisis unfolds the demand for the U.S. dollars increases to 142 - eN and the supply of dollars falls to 99 + eN. How should the central bank of Mexico react to this change?шири (ил 000 Demand Supply 180 QUANTITY OF LOANABLE FUNDS шири лил REAL EXCHANGE RATE NCO NET CAPITAL OUTFLOW Graph (c) Refer to Figure 32-3. At an interest rate of 4 percent, the diagram indicates that Supply QUANTITY OF DOLLARS Demand there is a surplus in the market for foreign-currency exchange. national saving equals domestic investment. net capital outflow + domestic investment national saving. in the market for foreign-currency exchange the quantity of dollars supplied equals the quantity of dollars demanded.Consider the balance-of-payments accounting information for Lalaland in 2010 as shown in the table below. All values are in billions of dollars and any variables not provided below have a value of zero. Exports Imports Net foreign-investment income Capital outflows Capital inflows O A. an increase of $190 billion B. a decrease of $190 billion C. an increase of $50 billion D. a decrease of $50 billion E. insufficient information to determine 580 460 - 70 180 90 What is the net change in the stock of Lalaland's investments abroad in 2010?