Graphs needed. If there is a huge discount in the technological products in Japan and at the same Atime there is a fall in the tax rates for the firms in the exporting sector in America; then what happens to dollar/yen exchange rate under the conditions of flexible exchange rates? Sketch graph and explain your answer.

Graphs needed. If there is a huge discount in the technological products in Japan and at the same Atime there is a fall in the tax rates for the firms in the exporting sector in America; then what happens to dollar/yen exchange rate under the conditions of flexible exchange rates? Sketch graph and explain your answer.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter36: Exchange Rates And Financial Links Between Countries

Section: Chapter Questions

Problem 5E

See similar textbooks

Similar questions

How does the decline in tariff, import restriction, and exchange rate controls help the growth of transportations and the logistics industry?
If in a country the tariff rates rises and at the same time the personal income tax rates in the country falls, what happens to the exchange rates? sketch a graph and explain please
Draw and carefully label the Euro-U.S. dollar foreign exchange graph as discussed in the textbook.You must use the Euro/US $ exchange rate as your price variable. Assume we are currently in marketequilibrium. Illustrate using the graph how the equilibrium euro/dollar foreign exchange rate wouldbe affected by the following events, holding all else constant. Use a different graph for each part.Explain in words why the equilibrium exchange rate changed. Show an increase in US productivity relative to the Euro Area
1) Use the DD-AA graph to illustrate the following. Elaborate on your results. a. The phenomenon of exchange rate overshooting. b. The effects of both temporary and permanent tariffs on all imports.
If in a country the tariff rates rises and at the same time the personal income tax rates in the country falls, what happens to the exchange rates? sketch a graph and explain please
Draw and carefully label the Euro-U.S. dollar foreign exchange graph. You must use the Euro/US $ exchange rate as your price variable. Assume we are currently in market equilibrium. Illustrate using the graph how the equilibrium euro/dollar foreign exchange rate would be affected by the following events, holding all else constant. Use a different graph for each part. Explain in words why the equilibrium exchange rate changed. An unexpected increase in the US inflation rate relative to the Euro Area.
Assume that American rice sells for $100 per bushel,Japanese rice sells for 16,000 yen per bushel, and thenominal exchange rate is 80 yen per dollar.a. Explain how you could make a profit from thissituation. What would be your profit per bushelof rice? If other people were to exploit the sameopportunity, what would happen to the price of ricein Japan and the price of rice in the United States?b. Suppose that rice is the only commodity in theworld. What would happen to the real exchangerate between the United States and Japan?
Suppose that currency market for Mexican pesos and Canadian dollars is initially in equilibrium, with 10 pesos trading for 1 Canadian dollar. Because of a new trade agreement, there has been a shift in the demand for pesos due to a sudden increase in the capital inflow from Canada to Mexico. What is the effect of the capital inflow on the exchange rate of pesos for Canadian dollars? Explain and show grahically. On your graph, Quantity of Canadian dollars should be on the vertical axis and the Exchange rate (Mexican pesos per Canadian dollar should be on the vertical axis.
If the domestic prices for traded goods rose 50 percent over 10 years in Japan and 100 percent over those same 10 years in United States, what would happen to the yen/dollar exchange rate? Why?
9. A) Where does the market for foreign currency come from? How does this market work if we use the flexible exchange rate system? Using terms from lecture what happens to both countries currency if there is a shift of supply or demand? There were terms given that are used to describe changes in currency exchange rates, define and use these terms. B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 50 pesos and the exchange rate is $3/peso what is the U.S. price? C) If the demand for pesos goes up what happens to the exchange rate? Answer for the U.S. dollar and the Mexican peso. Now the demand to invest in Mexican real estate goes up what now happens to exchange rates?
Draw and carefully label the Euro-U.S. dollar foreign exchange graph as discussed in the textbook. Assume we are currently in market equilibrium. Illustrate using the graph how the equilibrium euro/dollar foreign exchange rate would be affected by the following events, holding all else constant. Explain in words why the equilibrium exchange rate changed An increase in US short-term interest rates while Euro interest rates were unchanged.
Presently, the dollar is worth 140 Japanese yen in the spot market. The interest rate in Japan on 90-day government securities is 4 percent; it is 8 percent in the United States. a. If the interest-rate parity theorem holds, what is the implied 90-day forward exchange rate in yen per dollar? b. What would be implied if the U.S. interest rate were 6 percent?