The demand for Australian dollars in the foreign exchange market equals 12000 - 2000E and the supply of Australian dollars in the foreign exchange market equals 3000 + 3000E, where E is the nominal exchange rate expressed in yen per Australian dollar. If the Australian dollar is fixed at 3 yen per Australian dollar, then to maintain this fixed rate, what is the required change in the Reserve Bank of Australia's holdings of yen?
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- 19. The demand for Australian dollars in the foreign exchange market equals 12,000–2,000e and the supply of Australian dollars in the foreign exchange market equals 3,000+3,000e, where e is the nominal exchange rate expressed in yen per Australian dollar. If the Australian dollar is fixed at 3 yen per Australian dollar, then to maintain this fixed rate, what is the required change in the Reserve Bank of Australia's holdings of yen? a. decrease by 18,000 yen b. increase by 18,000 yen c. decrease by 2,000 yen d. increase by 2,000 yen 20. Use the following information about Australia to answer the question: Sale of wool to Italy is $400, tuition paid by overseas students is $800, dividend payments made by overseas firms to Australian companies is $900, purchase of overseas stocks by Australian residents is $600, and purchase of Australian government bond by foreign investors is $1,300. What is the balance of the capital account in Australia? a. $1,200 b. $2,100 c. $1,700 d. $700The demand for Australian dollars in the foreign exchange market equals 14000 – 3000e and thesupply of Australian dollars in the foreign exchange market equals 2000 + 2000e, where e is thenominal exchange rate expressed in euros per Australian dollar. If the Australian dollar is fixed at 2euros per Australian dollar, then to maintain this fixed rate, what is the required change in theReserve Bank of Australia’s holdings of euros? 1increase by 4000 euros 2decrease by 2000 euros 3decrease by 4000 euros 4increase by 2000 eurosSpeculators who anticipate a/n)........ in the future value of the dollar relative to the future value of the yen will O decrease increase the demand for dollars O increase; increase the demand for dollars O decrease, decrease the demand for yen O increase, increase the demand for yen
- Compute the profit from triangular profit if the bid and ask rate for pound and US$ are 0.70pound/US$, 0.73pound/US$, and for US$ and euro are 0.9euro/US$ and 0.94euro/US$, and for pound and euro are 0.64pound/euro, and 0.68pound/euro. Compute the triangular arbitrage profit if the notional sum is $1,000. The steps to be followed are buy euros, then buy pound and then buy US$. a. -$ 32.35 b. -$ 73.53 c. $ 72.19 d. $ 9.12Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, DeGraw agreed to be paid in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. a. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw receive after it exchanged yen for U.S. dollars? b. What is the difference (in dollars) between what DeGraw could have received had they asked for payment immediately (before the devaluation of the yen) instead of six months later?19. The demand for Australian dollars in the foreign exchange market equals 12000 - 2000E and the supply of Australian dollars in the foreign exchange market equals 3000+3000E, where E is the nominal exchange rate expressed in yen per Australian dollar. If the Australian dollar is fixed at 3 yen per Australian dollar, then to maintain this fixed rate, what action is required by the Reserve Bank of Australia in the foreign exchange market? O sell 6000 dollars and purchase yen O sell 1000 dollars and purchase yen O purchase 1000 dollars and sell yen O purchase 6000 dollars and sell yen Consider a small economy that does not permit international borrowing or lending. The country's autarky real interest rate is less than the world real interest rate. Now suppose the economy removed capital controls. Which of the following is TRUE? O There is an excess supply of capital in the domestic economy and capital flows in O There is an excess demand for capital in the domestic economy and capital…
- Which of the following statements is true? ohe demand for foreign currency in the United States increases as the volume of imports increases O The demand for foreign currency in the United States increases as the volume of exports increases O The demand for toreign currency in the United States decreases with a decrease in the inflation rate abroad. O The demund for foreign currency in the United States decreases as foreign interest rates rise O The demand for foreign currency in the United States is unaffected by U.S. demand for foreign goods and servicesThe annual demand for and supply of shekels in the foreign exchange market is given as: Demand = 30,000 8,000e Supply = 25,000 + 12,000e where the nominal exchange rate (e) is expressed as U.S. dollars per shekel. The shekel is fixed at 0.30 dollars per shekel. The country's international reserves are $600. Foreign financial investors hold checking accounts in the country in the amount of 5,000 shekels. a. Suppose that foreign financial investors do not fear a devaluation of the shekel, and thus do not convert their shekel checking accounts into dollars. ?? which means that the country can After one year, the value of the country's international reserves is fixed value of 0.30 U.S. dollars per shekel. b. Now suppose that foreign financial investors come to expect a possible devaluation of the shekel to 0.25 U.S. dollars. In regards to whether this possibility should worry them or not, which of the following statements is correct: maintain its O This possibility should worry them, as a…Assume that when digging to plant flowers at the backyard of college in northern Ireland a very rich vein of gold is discovered . If the government (a)monetises (b) sterilises this windfall how will the pound sterling to Euro exchange rate be affected
- In France, one kilogram of macadamia nuts costs 10.5Euro and 10 Dollars in Canadian in Canada. According to the law of one price, the expected exchange rate between the Euro and the Canadian would be_____ 1.5Euro/$ 0.12Dollar/Euro 1.67 Dollar/Euro 0.67 Euro/DollarIf the Fed started printing large quantities ofU.S. dollars, what would happen to the numberof Japanese yen a dollar could buy? WhyDetermine for each, whether the interest parity condition holds or not, if Ese = 1.10 Interest Rate for the Dollar R$ 0.07 0.08 0.09 0.1 0.12 Page 9 of 11 Interest Rate for the Euro Re 0.02 0.08 0.04 0 0.04 Expected Rate of Dollar Depreciation Against Euro (Ese-Este)/Ese 0.11 0.16 0.05 0.11 0.16 Interest Parity Condition Holds? (YES/NO)