Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 1E
To determine
(a)
The price of 1 US dollar in terms of euro, given the exchange rate 1 euro = $1.41
Expert Solution
Answer to Problem 1E
$1 = 0.71 euro
Explanation of Solution
1 euro = $1.41
So, $1 =
$1 = 0.71 euro
Economics Concept Introduction
Exchange rate − The value of one currency in terms of another currency.
To determine
(b)
The price of 1 US dollar in terms of euro, given the exchange rate 1 Chines Yuan = $0.15
Expert Solution
Answer to Problem 1E
$1 = 6.67 Chinese Yuan
Explanation of Solution
1 Chines Yuan = $0.15
So, $1 =
$1 = 6.67 Chinese Yuan
Economics Concept Introduction
Exchange rate − The value of one currency in terms of another currency.
To determine
(c)
The price of 1 US dollar in terms of euro, given the exchange rate 1 Israeli shekel = $0.28
Expert Solution
Answer to Problem 1E
$1 = 3.57 Israeli shekel
Explanation of Solution
1 Israeli shekel = $0.28
So, $1 =
$1 = 3.57 Israeli shekel
Economics Concept Introduction
Exchange rate − The value of one currency in terms of another currency.
To determine
(d)
The price of 1 US dollar in terms of euro, given the exchange rate 1 Kuwaiti dinar = $3.60
Expert Solution
Answer to Problem 1E
$1 = 0.28 Kuwaiti dinar
Explanation of Solution
1 Kuwaiti dinar = $3.60
$1 =
$1 = 0.28 Kuwaiti dinar
Economics Concept Introduction
Exchange rate − The value of one currency in terms of another currency.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
In mid-2006, a British pound sterling (the monetary unit in the United Kingdom) was worth 1.4 euros (the monetary unit in the European Union). If a U.S. dollar bought 0.55 pound sterling in 2006, what was the exchange rate between the U.S. dollar and the euro?
1 Suppose that two countries, Indonesia and Vietnam, produce coffee. The currency unit used in Indonesia is the Rupiah (IDR). The currency unit used in Vietnam is the Dong (VND). In Vietnam, coffee sells for 4,500 dong (VND) per pound. The exchange rate is 1.57 VND per 1 IDR, EVND/IDR = 1.57.
2 If the law of one price holds, what is the price of coffee in Indonesia, measured in Rupiah (assume we are talking about the same type of coffee)? Please round your answer to the nearest whole number.
Assume the price of coffee in Indonesia is actually 3000 IDR per pound. Compute the relative price of coffee in Indonesia versus Vietnam (round your answer to 2 decimal places). Where will coffee traders buy coffee? Where will they sell coffee in this case? How will these transactions affect the price of coffee in Vietnam? In Indonesia?
when the exchange rate for the British pound changes from $1.60 per pound to $1.40 per pound, then, holding everything else constant, the pound has __________, American wheat sold in Britain becomes _________ expensive, and British cars sold in the United States become __________ expensive.
depreciated, less, less
depreciated, more, less
appreciated, more, less
appreciated, more, more
depreciated, more, more
appreciated, less, more
depreciated, less, more
Knowledge Booster
Similar questions
- Currency Values in 2015 and 2016 Canada (dollar) (peso) (yuan) (yen) Country Currency Percentage 2015 2016 0.82710.6892 0.0683 0.0538 0.1608 0.1522 |0.0080 0.0086| 36% Мexico 28% China 20% Japan 16% Based on the exchange rate table, which statement is correct? A. The Chinese yuan appreciated in value between 2015 and 2016. B. The Canadian dollar depreciated in value between 2015 and 2016. C. The Japanese yen depreciated in value between 2015 and 2016. D. The Mexican peso appreciated in value between 2015 and 2016.arrow_forwardHow much is the difference between the cross-exchange rates for Rupees (India) and Euro (europe) Show any calculations. Explain the reason for that difference.arrow_forwardThe euro/dollar exchange rate is 1 euro = $1.20. According to the law of one price, a camera that sells for $240 in New York should sell for how many euros in Germany?arrow_forward
- The U.S. dollar exchange rate increased from $0.96 Canadian in June 2011 to $1.03 Canadian in June 2012, and it decreased from 81 Japanese yen in June 2011 to 78 yen in June 2012. 1. Did the U.S. dollar appreciate or depreciate against the Canadian dollar? Did the U.S. dollar appreciate or depreciate against the yen? 2. What was the value of the Canadian dollar in terms of U.S. dollars in June 2011 and June 2012? Did the Canadian dollar appreciate or depreciate against the U.S. dollar over the year June 2011 to June 2012? 3. What was the value of 100 yen in terms of U.S. dollars in June 2011 and June 2012? Did the yen appreciate or depreciate against the U.S. dollar over the year June 2011 to June 2012?arrow_forwardSuppose that on June 13, 2019, an ornamental bookcase handmade in Canada is priced at CAD 1,120. The approximate U.S. dollar price of the bookcase would be If the nominal exchange rate for the U.S. dollar-euro falls from $1.3457 to $1.07656 per euro, the euro in value, or relative to the U.S. dollar.arrow_forwardWhat are the basic factors that determine the value of a currency? Briefly describe howvarious economic factors can affect the equilibrium exchange rate of the Pakistani rupee’svalue with respect to that of the dollar?arrow_forward
- Suppose that if you purchase a big Mac in Coral Springs, FL in the US, it will cost you $3.95. On the other hand, if you purchase the same big Mac in Florianopolis in southern Brazil, it will cost you 18.85 Brazilian real. The current exchange rate is $1 US buys 5.60 real. In this case, according to the law of one price, the exchange rate should be that $1 US buys time we predict that the US dollar should real, and hence, over ---- O 5.95; appreciate O 5.95; depreciate O 4.77; appreciate 4.77; depreciatearrow_forwardYou own a local company. In the past year, you successfully expanded your sales market into Europe, and you now have profits and cash denominated in euros. You want to convert the euros to your home country currency to repatriate the profits and pay taxes. You are a. not required to convert the euros to the home currency to pay taxes. b. a demander of the euro in the foreign exchange market. c. a supplier of your home country's currency in the foreign exchange market. d. a demander of your home country's currency in the foreign exchange market.arrow_forwardWhen you write an exchange rate in terms of how many units of a foreign currency it takes to buy one US dollar, we call that: a)a direct quote b) the real price c) an indirect quote d) a depreciationarrow_forward
- currencies: China (Yuan); Euro Area (Euro); Japan (Yen); Mexico (peso); UK (Pound Sterling). 3.1. For each currency, plot on a separate graph (so in total 5 separate graphs) the monthly exchange rates and discuss if (relative to the US dollar) they are freely floating, moving within a band, or are fixed. Use the data from ALL available years.arrow_forwardSuppose 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 ___ .arrow_forward1. The principal function of the foreign exchange market is the transfer of funds, thus purchasing power, from one nation and currency to another. 2. If it takes 116.57 yen to buy one dollar, it takes $.0085785 to buy one yen. 3. Purchasing-power parity theory postulates that the change in the exchange rate between two currencies is proportional to the change in the ratio in the two countries' general price levels. 4. The price-specie-flow adjustment mechanism operates by the deficit nation losing gold and experiencing a reduction in its money supply. 5. Monetary policy is very effective under a fixed exchange rate policy. True or Falaearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
