Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 21, Problem 9DQ
To determine
Whether a fixed exchange rate is a simultaneous price ceiling and price floor .
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Which of the following statements is true of a flexible exchange rate system?
O A. Market forces tend to undervalue a currency over time.
O B.
Market forces tend to push the exchange rate of a currency to market clearing levels over time.
Market forces do not affect exchange rates between different currencies.
O C.
O D. Market forces tend to overvalue a currency over time.
If the ratio of the dollar price of a U.S. toy to the dollar price of the same toy sold in China is greater than one, retailers in the United States should
O A. should not buy the toys from both Chinese suppliers and U.S. suppliers
O B. buy the toys from Chinese suppliers
O C. buy the toys from both Chinese suppliers and U.S. suppliers
O D. buy the toys from American suppliers
Which of the following is likely to be true of the nominal and the real exchange rates in the short run and in the long run if prices in two countries do not
respond to exchange rate changes?
O A. The real and the nominal exchange rates between…
Which one of the following statements is TRUE?
Select one:
O a. The more extensive are factor movements, the greater is the loss from a fixed
exchange rate.
O b. The less extensive are cross-border trade and factor movements, the greater is
the gain from a fixed exchange rate.
O c. The more extensive are cross-border tráde, the greater is the loss from a fixed
exchange rate.
Od. The more extensive are cross-border trade and factor movements, the greater is
the gain from a fixed exchange rate.
Oe. The more extensive are cross-border trade and factor movements, the greater is
the loss from a fixed exchange rate.
The supply curve for Japanese yen on the foreign-exchange market is upward-sloping when plotted against the exchange rate (measured as the Canadian dollar
price of one Japanese yen) because
Select one
O a when the dollar appreciates, Canadian goods are cheaper in Japan, and more Canadian exports are therefore demanded,
O b. when the dollar depreciates, the price of Japanese exports to Canada decreases.
Oc when the dollar depreciates, Canadian goods are cheaper in Japan, and more Canadian exports are therefore demanded
O d. an appreciation of the dollar will cause the yen prices of Canadian exports to fall
Oe. a depreciation of the dollar will cause the yen prices of Canadian goods to rise.
Chapter 21 Solutions
Macroeconomics
Ch. 21.1 - Prob. 1QQCh. 21.1 - Prob. 2QQCh. 21.1 - Prob. 3QQCh. 21.1 - Prob. 4QQCh. 21.A - Prob. 1ADQCh. 21.A - Prob. 1ARQCh. 21.A - Prob. 1APCh. 21 - Prob. 1DQCh. 21 - Prob. 2DQCh. 21 - Prob. 3DQ
Ch. 21 - Prob. 4DQCh. 21 - Prob. 5DQCh. 21 - Prob. 6DQCh. 21 - Prob. 7DQCh. 21 - Prob. 8DQCh. 21 - Prob. 9DQCh. 21 - Prob. 10DQCh. 21 - Prob. 11DQCh. 21 - Prob. 1RQCh. 21 - Prob. 2RQCh. 21 - Prob. 3RQCh. 21 - Prob. 4RQCh. 21 - Prob. 5RQCh. 21 - Prob. 6RQCh. 21 - Prob. 7RQCh. 21 - Prob. 8RQCh. 21 - Prob. 9RQCh. 21 - Prob. 10RQCh. 21 - Prob. 1PCh. 21 - Prob. 2PCh. 21 - Prob. 3PCh. 21 - Prob. 4PCh. 21 - Prob. 5P
Knowledge Booster
Similar questions
- The law of supply of foreign exchange tells us that, other things remaining the same, Select one: O A. the higher the exchange rate, the greater is the supply of Canadian dollars O B the lower the exchange rate, the smaller is the supply of Canadian dollars. O C. the higher the exchange rate, the greater is the quantity of Canadian dollars supplied. OD the lower the exchange rate, the greater is the quantity of Canadian dollars supplied. O E. the lower the exchange rate, the greater is the supply of Canadian dollars.arrow_forwardSuppose a basket of goods costs $50 in the U.S. and €20 in France. What exchange rate, in dollars per euro, would be consistent with purchasing power parity? O $1.50 O $0.40 O $2.50 O $2arrow_forwardDetermine which account of the Balance-of-Payments is affected by the following transaction: You travel to the United States for holiday and spend US$500 Select one: O a. Current Account - Imports O b. Capital Account - Portfolio Investment O c Current Account - Exports O d. Capital Account Foreign Direct Investment O e. Current Account- Transfersarrow_forward
- Suppose there is a wave of popularity for American fruit in your country. How will this affect the market for foreign exchange and the real exchange rate? Select one: Outward shift of the demand curve; the real exchange rate rises. O a. O b. Outward shift of the supply curve; the real exchange rate falls. O c. Outward shift of the demand curve; the real exchange rate falls. O d. Inward shift of the demand curve; the real exchange rate rises. O e. Inward shift of the supply curve; the real exchange rate rises. Next page ge n this pagearrow_forwardConsider the following scenario: Soybeans Textiles Country A O 100 O 150 O200 300 3 1 Country B 10 5 Suppose that w, $1000 and e=1 (e is the exchange rate). What is the maximum level of w, (expressed in $) such that these 2 countries trade according to Comparative Advantage?arrow_forwardIn Windsor, Ontario, a Big Mac from McDonald's costs C$4.17 (Canadian dollars), and across the border in Detroit it costs $3.56 (US dollars). a. Suppose the nominal US exchange rate with Canada is US$0.74 per Canadian dollar. Does purchasing power parity hold between the two countries? O Yes, it holds because the Canadian Big Mac costs less in terms of U.S. dollars. O No, it does not hold because the Canadian Big Mac costs more in terms of U.S. dollars. O No, it does not hold because the Canadian Big Mac costs less in terms of U.S. dollars. O Yes, it holds because the Canadian Big Mac costs more in terms of U.S. dollars. b. What is the exchange rate for the US if purchasing power parity holds. Instructions: Round your answer to three decimal places. US dollar per Canadian dollar $arrow_forward
- If there is a significant increase in foreign demand for our exports, and the exchange rate between the dollar and other currencies is expressed as E = units of foreign currency per dollar, what is likely to happen to E in a flexible exchange rate regime? Select one: O a. E will rise. O b. E will fall. O c. E will plummet, as speculators expect it to fall further. O d. E will be unchanged, as the government offsets any market forces that might move the exchange rate. Checkarrow_forwardSuppose that Great Britain and the United States are trading partners. Assume that the initial exchange rate in Great Britain is £0.76= 1$. Now suppose that the opportunity cost of consumption in the United States begin to rise. Which of the following explain what is expected to happen in the British forex market? O The demand for British pounds will decrease, leading to a depreciation of the US dollar. O The supply of British pounds will increase, leading to an appreciation of the British pound. O The supply of American dollars will decrease, leading to a depreciation of the British pound. O The demand for American dollars will decrease, leading to an appreciation of the British pound. Please do fast ASAP fastarrow_forwardDetermine which account of the Balance-of-Payments is affected the following transaction: A local company exports rum valued at USS 1 million to the United States. Payment is made to the local company's account at Citibank's local branch. Select one: O a. Capital Account - Capital Transfers O b. Current Account - Imports O. Capital Account - Foreign Direct Investment O d. Capital Account - Portfolio Investment O e. Current Account - Exportsarrow_forward
- Determine which account of the Balance-of-Payments is affected the following transaction: A local resident purchases a retirement condo in Florida for US$10 million. Select one: O a. Current Account - Transfers O b. Current Account - Imports O c. Capital Account - Portfolio Investment O d. Capital Account - Foreign Direct Investment Oe. Current Account - Exportsarrow_forwardnomics 1B Jan22 Y1 S2 The macroeconomic objective of balance of payments stability refers to... O A. The exchange rate equaling zero. O B. Exchange rate stability. O C. Exports equal imports. O D. Exports are stable. Previous page s://mancosaconnect.ac.za/mod/quiz/attempt.php?attempt=806737&cmid=245381&page=4# O EI e AR A X *D 1arrow_forwardIf Italian demand for Canadian lumber decreases, the supply of Canadian dollars to the foreign-exchange market will and the demand for euros will therefore O A. remain the same; remain the same O B. increase; decrease O C. increase; remain the same O D. decrease; increase O E. decrease; decreasearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education