Consider the short-run effect of a decrease in US money demand on interest rates and exchange rates? Draw a Graph Consider the short-run effect of a decrease in domestic real Gross National Product (GNP) on interest rates and exchange rates. Draw a Graph
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Consider the short-run effect of a decrease in US money demand on interest rates and exchange rates? Draw a Graph Consider the short-run effect of a decrease in domestic real Gross National Product (GNP) on interest rates and exchange rates. Draw a Graph
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- What does this graph show and what is the relationship between real exchange rate and net exports?RUBLES PER KRONE RUBLES PER KRONE 3. Changes in the foreign exchange market The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose a recession in Russia causes Russian incomes to decrease, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. Note: Select and drap 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 of Kraner Demand for Kraner Demand for Kroner QUANTITY OF KRONER Supply of Kroner ? The decrease in Russian Incomes causes the Danish krone to relative to the Danish krone. relative to the Russian ruble and causes the Russian…Real Exchange Rate Suppose the Canadians suddenly have a switch in taste from Japanese automobiles to American automobiles. On the following graph, indicate what happens to the demand for U.S. dollars in the market for foreign-currency exchange as a result of this change in tastes. Supply Quantity of Dollars Demand Demand Supply This causes the value of dollars in the market for foreign-currency exchange to exports to , and the equilibrium quantity of net
- Consider the shift drawn in Graph B. In this graph: EHIF) EHIF) ERROM LY) ERRIM) ERR(F) MP ERR ERR(F) t LY) ERR MP E(H/F) EH/F) ERRH) LY) ERRH) B ERRIF) Mu D ERR ERRF) # Mu LI ERR The Home currency will depreciate and the Foreign currency will depreciate. The Home currency will appreciate and the Foreign currency will depreciate. The Home currency will appreciate and the Foreign currency will appreciate. The Home currency will depreciate and the Foreign currency will appreciate.Suppose a country imposes an import tariff (as a topical real-world example, think about the U.S. under President Donald Trump imposing tariffs on China and a host of other countries). Answer the following questions and 1. What is the effect on imports, exports, and net exports? 2. What is the effect on net foreign investment and the exchange rate?Briefly 1. describe the relationship between a country's inflation rate and its exchange rate. 2. explain why the above relationship exists.
- The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table presents nominal exchange rate data for March 16, 2019, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Suppose that on March 16, 2019, an ornamental bookcase handmade in Germany is priced at EUR 830. The approximate U.S. dollar price of the bookcase would be ______ . If the nominal exchange rate for the U.S. dollar–Japanese yen rises from $0.008538 to $0.0093918 per Japanese yen, the Japanese yen ______ (increase/decrease) in value, or_______ (appreciate/depreciate) , relative to the U.S. dollar.Define nominal exchange rate and real exchange rate. What are the two main types of exchange-rate systems? What explains the behavior of net exports represented by the J curve? How does real exchange rate affect net exports? Explain and give one example.The following graph depicts the foreign exchange market for euros. The blue line represents the demand schedule for euros, while the orange line represents the euro supply schedule. Suppose that real interest rates in France suddenly increase, while real interest rates in the United States remain stable. Use the graph to shift either the supply schedule, the demand schedule, or both, to depict the impact on the value of the euro. Then answer the question that follows. D QUANTITY OF EUROS As a result of this, the value of the euro is expected top VALUE OF EURO (U.S. dollars per euro)
- Consider the exchange rate between the Moroccan dirham and the euro. Suppose the Moroccan government and the Eurozo fix the exchange rate (ER) at 2.5 dirham per euro, as shown by the grey line on the following graph. Refer to the following graph when answering the questions that follow. EXCHANGE RATE (Dirham per euro) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 0 2 4 8 10 Supply of Euros 6 12 QUANTITY OF EUROS (Billions) Demand for Euros 14 ER 16 (?)1) Consider that a country is a net lender. a) Draw the graph to present net exports. Describe the graph briefly. b) Savings increased. Analyze its effects on net exports and capital transfers using graphsSuppose that the Japanese yen rises against the U.S. dollar-that is, it will take more dollars to buy a given amount of Japanese yen. Explain why this increase simultaneously increases the real price of Japanese cars for U.S. consumers and decreases the real price of U.S. automobiles for Japanese consumers. dollars, and the purchase of a U.S. As the value of the yen grows relative to the dollar, the purchase of a Japanese automobile priced in yen requires automobile priced in dollars requires yen. more fewer
