a) If a certain automotive part can be purchased in Mexico for 61 pesos or in Ca
ID: 1099256 • Letter: A
Question
a) If a certain automotive part can be purchased in Mexico for 61 pesos or in Canada for $6.25 and if the nominal exchange rate is 11 pesos per Canadian dollar, then the automotive part is more expensive in Canada costs the same in Mexico and Canada is more expensive in Mexico costs more in Mexico is less expensive in Canada b) The currency used in the Duchy of Saxony is the ducet. The demand for ducets in the foreign exchange market equals 8000 ? 2000e and the supply of ducets in the foreign exchange market equals 4500 + 3000e, where e is the nominal exchange rate expressed in dollars per ducet. If the ducet is fixed at $0.50 per ducet, then the ducet is _____ and the Duchy of Saxony has a balance-of-payments ______. overvalued; deficit of 750 ducets undervalued; deficit of 1000 ducets overvalued; surplus of 750 ducets overvalued; deficit of $750 undervalued; surplus of 1000 ducets c) In the early 1980s, high interest rates in the U.S. attracted enormous amounts of capital into the U.S. to buy stocks, bonds, real estate, and other assets. All other things being equal, supply-and-demand analysis of exchange rates would predict that the U.S. dollar would experience __________ relative to other currencies. a devaluation purchasing price parity an appreciation a revaluation a depreciation d) Suppose that the demand for euros in the foreign exchange market equals 8000 ? 2000e and the supply of euros in the foreign exchange market equals 4500 + 3000e, where e is the nominal exchange rate expressed in dollars per euro. The fundamental value of the euro is ____ euros per dollar or ___ dollars per euro. 2; 0.8 2.2; 45 45; 2.2 0.5; 2 1.428; 0.7 e) If the nominal exchange rate is 0.5434 British pounds per dollar, and is 0.02482 dollars per Indian rupee, then there are ____ Indian rupees per dollar, and _____ dollars per British pound. 40.29; 1.840 22.21; 2.292 1.998; 27.27 27.27; 1.998 1.840; 40.29 f) The currency used in the Duchy of Saxony is the ducet. The demand for the Saxonian ducet in the foreign exchange market equals 14,000 ? 3000e and the supply of ducets in the foreign exchange market equals 2000 + 2000e, where e is the nominal exchange rate expressed in dollars per ducet. If the ducet is fixed at $3 per ducet, then to maintain this fixed rate the Duchy of Saxony's international reserves must _______ ducets per period. increase by 1000 decrease by 9000 increase by 3000 decrease by 1000 decrease by 3000 g) A balance-of-payments surplus is the difference between capital inflows and capital outflows the net decrease in a country's stock of international reserves over a year the net increase in a country's stock of international reserves over a year the amount by which exports exceed imports over a year the amount by which imports exceed exports over a year h) The currency used in the Duchy of Saxony is the ducet. The demand for the Saxonian ducet in the foreign exchange market equals 14,000 ? 3000e and the supply of ducets in the foreign exchange market equals 2,000 + 2,000e, where e is the nominal exchange rate expressed in dollars per ducet. The fundamental value of ducet is ____ ducets per dollar or ____ dollars per ducet. 7; 0.143 2.4; 0.417 0.083; 12 0.417; 2.4 12; 0.083 i) If a country's international reserves are decreasing, then its exchange rate is ______ and there is a balance-of-payments _______. undervalued; surplus overvalued; deficit at its fundamental value; balance undervalued; deficit overvalued; surplus j) When the nominal exchange increases from 10.5 pesos per dollar to 10.8 pesos per dollar, the dollar has appreciated depreciated been devalued become undervalued become overvalued a) If a certain automotive part can be purchased in Mexico for 61 pesos or in Canada for $6.25 and if the nominal exchange rate is 11 pesos per Canadian dollar, then the automotive part is more expensive in Canada costs the same in Mexico and Canada is more expensive in Mexico costs more in Mexico is less expensive in CanadaExplanation / Answer
a) is more expensive in Canada
b) undervalued; deficit of 1000 ducets
c) an appreciation
d) 1.428; 0.7
e) 40.29; 1.840
f) decrease by 3000
g) the net increase in a country's stock of international reserves over a year
h) 0.417; 2.4
i) undervalued; deficit
j) appreciated
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.