6. Suppose that there are only two countries, the U.S. and Japan. If real interest rates rise in Japan, which of the following is NOT true? (a) More Japanese yen will be supplied in exchange for dollars. (b) More U.S. dollars will be supplied in exchange for yen. (c) The volume of yen traded will increase. (d) Japanese borrowers will be worse off.
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- (2).(a)What factors affect equilibrium exchange rate in the foreign exchange market? Use appropriate graphical illustrations to analyze the impact of relative inflation rates and relative interest rates on the exchange rate for the British pound sterling in terms of the U.S. dollar. (b)Šuppose the exchange rate for the Iraqi Dinar moves from $0.00069 to $0.00072. Which currency has appreciated and by what percentage? Which currency depreciated and by what percentage?1.)The rise of globalization is due to the many companies that have become multinational corporations for various reasons—for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well—for example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. a.)If the demand for a currency increases, the currency’s value will increase relative to other currencies. b.)If a government intends to prevent its currency’s value from falling relative to other currencies, it will purchase its currency from sellers in the market. c.)When a government limits imports and restricts foreign exchange transactions,…1.Recently, Hong Kong is undergoing several protests against the extradition bills. (Note: define the Hong Kong as a home country and Japan as foreign country.) Explain in words how this political event affects (i) the amount of net exports of Japan, the safe haven country, and (ii) the value Japanese Yen (JPY) relative to other currencies. 2. Thanks to the establishment of Eastern Economic Corridor (EEC), the Thai governments propose to offer tax breaks for certain years to attract foreign companies to construct their production sites. Explain in words how this change in fiscal policy affects the national saving (S), domestic gross investment (I!), net capital outflow (NKO), the real interest rate (?), the real exchange rate, (e") and the trade balance of Thailand.
- Question 5 (c) Do you think LOOP really works? Give a reason for your answer? (d) If a can of spam costs $2 in the US and 6 pesos in Mexico, what would be the peso/dollar exchange rate if PPP holds? 5. If inflation is 3.5% in US and 7% in Mexico. What will happen to the peso/dollar exchange rate?1. (a) In the figure below, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the foreign exchange rate? Foreign exchange rate (yen per dollar) 105 So 100 95 90 Do 80 3 4 Quantity (trillions of dollars per day) (b). Explain the three components of the balance of payments accounts. What must these three balances sum to? (c) If imports are $1,200 billion and exports are $1,300 billion, while net interest income and net transfers are zero, what is the current account balance? (d) If the current account balance is $235 billion and U.S. official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?'Question 10 Which statement is supported by the information in the table? Export and Import Table Canada United States Top Export Partners n Export Partner D United States United Kingdom Canada Mexico China Japan Percent of Exports 73.70% 4.20% 19.00% 13.30% 7.00% 4.50% Top Import Partners Import Partner United States China Mexico China Canada Mexico Japan Germany B The United States exports more goods to China than to Canada. Percent of Imports 49.50% Trade with China disrupts trade between the United States and Canada. 10.80% A Canada and the United States are each the chief exporting nation to the other. 5.50% 18.40% 14.20% 11.70% 5.80% 4.40% Canada imports more goods from the United States than it exports to the United States.
- Suppose a country has an overall balance of trade so that exports of goods and services equal imports of goods and services. Does that imply that the country has balanced trade with each of its trading partners?Economics 11 - Suppose that Turkish Lira interest rate is 10 %, the US Dollar interest rate is 6 percent, then a) O an investor should invest only in US Dollars if the expected Turkish Lira depreciation against the US Dollar is 4 percent. b) O an investor should invest only in US Dollars. c) an investor should invest only in Turkish Liras. d) O an investor should be indifferent between Turkish Liras and US Dollars if the expected Turkish Lira depreciation against the US Dollar is 4 percent.7. Foreign exchange market The following graph shows the foreign exchange market of the fictional country of Kalai, which uses dollars as its domestic currency. DOLLAR PRICE OF FOREIGN CURRENCY Supply of foreign currency Demand for foreign currency QUANTITY OF FOREIGN CURRENCY ? Suppose the foreign exchange market is in equilibrium. Which of the following statements are correct? Check all that apply. ☐ Exports of goods and services exceed imports. □ Imports plus the outflows of capital equals exports plus the inflow of capital. Imports of goods and services exceed exports. The quantity of foreign currency demanded equals the quantity supplied.
- 2. Determining long-term exchange rates Consider two countries, the United States and Japan, that trade with each other. Suppose that the productivity growth in the United States accelerates, but it remains the same in Japan. The following graph shows the supply and demand for the Japanese yen in the United States before the change in productivity. The vertical axis is the exchange rate of the yen in terms of the dollar, and the horizontal axis is the quantity of yen Show how the change in productivity affects the equilibrium exchange rate by shifting one or both of the curves on the graph Note: Select and drag one or both of the curves to the desired position. Curves will snap Into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther EXCHANGE RATE (Dollars per yeni Demand QUANTITY (Millions of yen) As a result of the change in productivity, the U.S. doilar appreciates depreciates Demand 161 SupplyQuestion 1 (20pts) Describe how each of the following transactions affects the U.S. Balance of Payments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.) (a) A French consumer imports American jeans and pays with a check drawn on a U.S. bank in Philadelphia. (b) An American company sells computer software to Costa Rica and receives a money order of $120,000. (c) A citizen from Italy enters the United States on an immigrant visa (that is, upon entering the United States she becomes a permanent resident of the United States). Her wealth in Italy is estimated to be about 1.5 billion U.S. dollars. (d) Frank Rogers, of Durham, buys 2,300.00 dollars of stocks from the German car maker BMW, from Citibank New York, paying with U.S. dollars. (e) An American company sells a subsidiary in the United States and with the proceeds buys a Romanian company. (f) The United States forgives debt of $3,200,000 to Canada. (g) An American family travels to…2. Determining long-term exchange rates Consider two countries, the United States and Japan, that trade with each other. Suppose that the productivity growth in the United States accelerates, but it remains the same in Japan. The following graph shows the supply and demand for the Japanese yen in the United States before the change in productivity. The vertical axis is the exchange rate of the yen in terms of the dollar, and the horizontal axis is the quantity of yen. Show how the change in productivity affects the equilibrium exchange rate by shifting one or both of the curves on the graph. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Supply Demand Supply Demand EXCHANGE RATE (Dollars per yer