Problem:
In 500-750 words discuss the impact of at least two different macroeconomic factors can impact a currency's exchange rate. How can the actions of a country's government directly and indirectly impact the exchange rate?
Problem Sets:
1. The Bank of the Midlands' bid price for Canadian dollars is $.7938 and its ask price is $.8100. What is the bid/ask percentage spread?
2. British pound is $1.73. The expected spot rate one year from now is assumed to be $1.66. What percentage change does this reflect and has the British pound depreciated or appreciated against the U.S. Dollar?
Additional Information:
This question is from Economics, particularly to Macroeconomics as well as it deals with how macroeconomic factors and the actions of the country's government can have an impact on country's foreign exchange rate. These have been stated in detail in the solution along with the problems.