QUESTION 7 Assume an exchange rate of $1.60 British pounds. A U.S. product sells

Question

QUESTION 7 Assume an exchange rate of $1.60 British pounds. A U.S. product sells in Britain for 18 pounds. By what percentage will dollar revenues change if the dollar price of a pound falls to .50 pounds? -20 percent -16 percent +16 percent O +20 percent QUESTION 8 If Japanese autos increase in popularity in the United States, then this event is most likely to cause the Japanese yen to: O Appreciate and the U.S. dollar to depreciate O Depreciate and the U.S. dollar to appreciate O Appreciate and the U.S. dollar to appreciate Depreciate and the U.S. dollar to depreciate

Explanation / Answer

7.

If exchange rate;

$1=0.60 pound

If a U.S. product is sold for 18 pounds in the Britain.

The product value in the U.S. dollar = ($1*18 pound /0.60 pounds)

=$30

Now if the If exchange rate;

$1=0.50 pound

If a U.S. product is sold for 18 pounds in the Britain.

The product value in the U.S. dollar = ($1*18 pound /0.50 pounds)

=$36

The percentage change in the dollar revenue = (change in the value/ initial value)*100

={( 36-30)/30}*100

=(6/30)*100

=+20%

Hence option fourth is the correct answer.

8.

If the Japanese auto has become popular in the united states, then people of the U.S. start purchasing more Japanese auto, therefore they need more Japanese Yen for purchasing, therefore the Japanese Yen demand increases, and therefore the Yen appreciates and dollar depreciates.

Hence the correct answer is option First.

Yen to appreciate and dallar to depreciates.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.