Bundle: Managerial Economics, 4th + Mindtap Economics, 1 Term (6 Months) Access Code
4th Edition
ISBN: 9781305618572
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 1MC
To determine
Equilibrium exchange rate.
Expert Solution & Answer
Explanation of Solution
The equilibrium exchange rate occurs at the point where the demand for dollar and supply of dollar intersect with each other. Thus, option ‘b’ is correct.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What will happen if the people expects that the value of a currency will increase?
a.There will be new monetary policies
b.The supply of that currency will rise
c.There will be no effect
d.The demand for that currency will rise
Assume that the Japanese government wants to reduce inflation. Which of the following would be an appropriate action for the Japanese government?
A. Sell yen for foreign currency
B. Decrease interest rates
C. None of the options are correct
D. Buy yen with foreign currency
E. Increase interest rates
Which of the following increases the price of the dollar relative to the Mexican
peso?
Select oneE
a. an increase in the supply of dollars
b. an increase in the demand for dollars
C. a decrease in the supply of pesos
d. an increase in the demnand for pesos
Chapter 11 Solutions
Bundle: Managerial Economics, 4th + Mindtap Economics, 1 Term (6 Months) Access Code
Knowledge Booster
Similar questions
- If a country experiences high inflation relative to the U.S., its exports to the U.S. should ____, its imports should ____, and there is ____ pressure on its currency's equilibrium value. Group of answer choices a. decrease; increase; upward b. decrease; decrease; upward c. increase; decrease; downward d. decrease; increase; downward e. increase; decrease; upwardarrow_forwardAn increase in the supply of U.S. dollars by the Federal Reserve will a. raise the value of the dollar because it will stimulate U.S. economic growth b. reduce the value of the dollar because of inflation fears in the United States c. decrease the value of the dollar because it will force other countries to raise their interest rates d. raise the value of the dollar because it will lead to higher U.S. interest ratesarrow_forwardIf 1000 Mexican pesos could buy $1.00 U.S. dollar in 2006 and 87 U.S. dollars in 2010, then:A. the dollar depreciated against the peso.B. the peso appreciated against the dollar.C. the dollar strengthened against the peso.D. the peso strengthened against the peso.arrow_forward
- If the Central Bank of China announces that the yen will trade from tomorrow onwards at 5 to the dollar instead of the current 3 to the dollar, this is known as a. Revaluation b. Devaluation c. Depreciation d. Appreciationarrow_forwardActivity 1. Describe briefly the effect of the following in purchasing power Inflation Currency Exchange Supply and demand Taxes Prices Investors Interest Ratesarrow_forwardinflation plays a major role determine whether a currency is appreciating or depreciating true falsearrow_forward
- An expected appreciation of the dollar, everything else held constant, should cause a. The supply of dollars to increase b. The demand for dollars to increase c. The dollar to depreciate now relative to other currencies d. The demand for dollars to decreasearrow_forwardInternational Finance (chapter 21) posting 2dn time for better explanation thanks Question Explain how each of the following will affect the relative values of the dollar and the French franc: 2.Inflation higher in France than in the United States. solve 2 base on questionarrow_forwardIf the Japanese yen appreciates against the U.S. dollar a. Americans should find Japanese goods are now less expensive b. Japanese residents would find Japanese goods are relatively less expensive than American goods c. U.S. goods should have an easier time competing against Japanese goods in both countries d. Japanese goods should have an easier time competing against U.S. goods in both countriesarrow_forward
- In 1971 a British company, Beecham Group, received a Swiss franc loan of CHF 100 million. By the time the loan was repaid in 1976, the British pound had depreciated significantly against the Swiss franc. Which of the following statements is correct? A. The cost in British pounds of making the repayment did not change. B. The financial manager of Beecham Group would not be concerned about the change in the value of the pound. C. The change in the value of the British pound increased the profitability of the Beecham Group. D. The cost in British pounds of making the repayment increased significantly.arrow_forwardIt could be said that the USD dollar is most popular currency. There are some countries that have, in some way or another, adapted the USD. a. Identify a country that has gone through the dollarization process. b. How does a country become dollarized? Is there a process? Explain. c. Using examples specific to the country identified in "a," discuss TWO positive impacts and TWO negative impacts that dollarization could have/is having on the country.arrow_forwardThe nominal exchange rate of the Australian dollar is 0.67. The CPI in the US is 300 and the same basket costs 430 in Australia. (a) What can you say about the purchasing power parity holding for Australia? Show calculation. Answer: 0.96 (b) The nominal Australian GDP is $1.5 trillion. Find Australia’s purchasing power parity GDP. Which one is more relevant for most purposes? What is the other one used for? Answer:1.56arrow_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:PEARSON
Engineering 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 Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial 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