Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Solved Assignments
Asked Questions
Answered Questions
If the dollar depreciates, what would you expect to happen to outsourcing by American companies? Explain and provide an example.
Estimate the color copier demand curve, assuming that it is linear.
Do you think that, immediately after the euro's introduction, the value of foreign exchange trading in euros was greater or less than the euro value.
What is the difference between the interest rate on one-year dollar deposits and that on one-year euro deposits (assuming no repayment risk)?
Imagine that everyone in the world pays a tax of percent on interest earnings. How would such a tax alter the analysis of the interest parity condition?
Does our analysis of the foreign exchange market suggest any connection between these two events?
Do you have any guesses about how the liquidity of euro deposits may be changing over time?
Determine the effect on the current dollar/euro exchange rate, assuming current interest rates on dollar and euro deposits do not change.
If the U.S. interest rate also remains constant, what is the new equilibrium $/£ exchange rate?
What would be the real rates of return on the assets in the preceding question if the price changes described were accompanied by a simultaneous.
Petroleum is sold in a world market and tends to be priced in U.S. dollars. How are its profits affected when the yen depreciates against the dollar?
A U.S. dollar costs 7.5 Norwegian kroner, but the same dollar can be purchased for 1.25 Swiss francs. What is the Norwegian krone/Swiss franc exchange rate?
What is the price of a bratwurst in terms of a hot dog? All else equal, how does this relative price change if the dollar depreciates to $1.25per euro?
How would economic statisticians have to modify the national income identity (13-1) if they wish to include such gains and losses as part of the definition.
Return to the example in this chapter's final Case Study of how a 10 percent dollar depreciation affects U.S. net foreign wealth.
How, then, is it possible that the United States received more foreign asset income than it paid out?
What would be the drain on U.S. GDP (as a percentage) from paying interest on the net foreign debt? Do you think this is a large number?
Why might a government be concerned about its official settlements balance (that is, its balance of payments)?
What was the balance of payments of Pecunia in that year? What happened to the country's net foreign assets?
How would these transactions show up in the balance of payments accounts of New York and New Jersey? What if the New Yorker pays cash for the machine?
Why should the measure of imports used in the GNP accounts therefore be defined to include only imports of final goods and services from abroad?
Compare this situation to the argument over carbon tariffs. Why might defenders argue that such tariffs are legal? What objections can you think of?
Imagine that the central bank of an economy with unemployment doubles its money supply. What the interest rate is initially below its long-run level?
Calculate the 1984-1985 rates of money supply growth and inflation for the United States and Brazil, respectively.
Continuing with the preceding question, note that the monetary value of output in 1985 was billion. Why do you think velocity was so much higher in Brazil?