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1. Suppose that a country's real growth is 2% a year, while its real deficit is rising 5% per year. Can the country continue to afford such deficit indefinitely? What problems might it face in the future?
2.The Fed wants to increase the money supply (which is currently 4000) by 200. The money multiplier is 3. For each 1 percentage point the discount rate falls, banks borrow an additional 20. Explain how the Fed can achieve its goals using the following tools: (in actual numbers)a. Change the reserve requirementb. Change the discount ratec. Us Open market operations
3. One type of toy bears is in China and exported to the US. A toy bear sells for 16 Yen in China. The exchange rate of Chinese yen and US dollars is $1 = 8 Yen.
a. what will be the price of this toy bear in US dollars?b. Suppose the US demand for this toy bear is D = 100- 10*P. P is the price in US dollar, what is the quantity of US demand for this toy bear?c. If the Chinese yen is depreciated by 20%. This means Chinese yen is worth 80% of its previous value compared to US dollar. What will be the US quantity of demand for this toy bear?
d. What conclusion you can make on the impact of exchange rate on exports?
A bicycle produced in the U.S. costs $100. Using the exchange rates listed in Table 1, what would the bicycle cost in each of the following nations?
When the Euro was 1st issued it hit the market at $1.17/ on 1 Jan 2001. Calculate the Euro price of the dollar when the Euro debuted?
If the average price of goods in Europe increase from 100 in year 2000 to 130 in year 2010. If the average price of goods in the U.S. rises from 120 in year 2000 to 140 in year 2010.
Smith identify that if the forward rate is lower than what interest rate parity indicates, the appropriate strategy would be to lend:
Suppose the spot exchange rate in dollars and yen is e=$1/100yen. The interest rate on a 6 months dollar denominated assets is i($)=1 percent and interest rate on comparable 6 months yen denominated assets
The given table lists the stages needed in the production of a personal computer. Determine the value of the computer in the GDP?
Suppose that economic growth is slower in the U.S. than in its trading partners. Given a system of floating exchange rates, will the impact of this growth differential be for US with respect to exports and the value of the dollar?
Assume the value of the French Franc in terms of dollar is 50 on October 12 , and 44 on October 17. Determine the Franc appreciated or depreciated against the dollar?
One year ago, a United State investor converted dollars to yen and purchased one hundred shares of stock in a Japanese company at a price of 3,150 yen a share.
Assume that the Bank of Canada decides to expand money supply. Explain why would it be counter productive for the Bank of Canada to fix the value of the exchange rate?
In the value process, the estimation of the has historically been somewhat neglected in relation to the other steps in the process.
The Big Mac Price Index calculated through the Economist has consistently found the United State dollar to be undervalued against some other major currencies,
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