Calculate the dollar exchange rate, International Economics

Assignment Help:

Assume the United States exports 1000 computers at a price of $3000 each and imports 15 UK autos at a price of 10000 pounds each. Assume that the dollar/pound exchange rate is $2 per pound.

a. Calculate in dollar terms, the US export receipts, import payments and trade balance prior to a depreciation in the dollar's exchange rate.

b. Suppose the dollar's exchange value depreciates by 10%. Assuming that the price elasticity of demand for US exports equals 3.0 and the price elasticity of demand for US imports equals 2.0, does the dollar depreciation improve or worsen the US trade balance? Why?

c. Now assuming that the price elasticity of demand for US exports equals 0.3 and the price elasticity of demand for US imports equals 0.2. Does this change the outcome? Why?

 


Related Discussions:- Calculate the dollar exchange rate

Evaluate exchange rate against the russian ruble, Q. Suppose Russia's infla...

Q. Suppose Russia's inflation rate is 200% over one year, but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swis

#title.circular flow of income of an open economy., illustrate the circular...

illustrate the circular flow of income of an open economy and explain the effects of various injections and withdrawal in the circular flow?

Trade and costs, how trade lowers the costs of making computer peripherals ...

how trade lowers the costs of making computer peripherals such as mice and keyboards

What factors lie behind capital inflows to developing world, Q. Wha...

Q. What factors lie behind capital inflows to the developing world? Answer: Several developing countries have received a lot of capital inflows that lead them to an

Double factors terms of trade, Calculate the doublefactoral terms of trade ...

Calculate the doublefactoral terms of trade (TD), formulated by Jacob Viner based on following information: Suppose in the base year of 2015, Px= 100, Pm= 100, Zx= 100, Zm= 100and

Economic situattion, what is the current economic situation in the world?

what is the current economic situation in the world?

Explain u.s and european foriegn exchange flow chart, Us and European Forie...

Us and European Foriegn Exchange Flow chart Answer: The figure explicate how the money markets of two countries are linked through the foreign exchange market. The financial

Development by stabilisation & reform-lower income countries, Development t...

Development through stabilisation and reform can be understood as follows     The reasoning here was that the trade and resource transfer could not, by themselves, lift L

Calculus, Application of defferential calculus in economics

Application of defferential calculus in economics

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd