Demand for dollars at each exchange rate

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Reference no: EM136939

Q. 1. Suppose that ex is the exchange rate among the U.S. dollar and the Chinese Yuan in that ex indicates the number of Yuan that can be purchased with 1$. The requirement for dollars, denoted D$, is given by the equation D$ = 2,800 - 200ex. The supply of dollars denoted, S$, is given by the equation S$ = 400 - 400ex.

2. Suppose the demand for dollars increases by 300 billion at each exchange rate. Clarify if the increase in demand results from a large purchase by the Chinese of a new American-made airplane or a large purchase by Americans of new lower priced Chinese-made high definition televisions. Analyze new demand for dollars at each exchange rate and graph the new demand curve. Elucidate what is exchange rate of new equilibrium, specified the original supply of dollars?

3. Suppose the supply of dollars increases by 600 billion at each exchange rate. Elucidate if the amplify in supply results from a large purchase by the Chinese of a new American-made airplane or a large purchase by Americans of new lower priced Chinese-made high definition televisions. Compute new supply of $ at each exchange rate and graph the new supply curve. What is the new equilibrium exchange rate given the original demand for dollars?

Reference no: EM136939

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