1. decline 10% Increase 10% decline less than 10% remain unchanged 2. increase 1
ID: 1138219 • Letter: 1
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1. decline 10%
Increase 10%
decline less than 10%
remain unchanged
2. increase 10%
decline 10%
decline less than 10%
remain unchanged
3. 1786 ,1885, 2182,1607
4. 2182,1885,1786,1607
5. deprecitae 10%
neither appreciate nor depreciate
appreciate 10%
appreciate 5%
depreciate 5%
6. remain constant
decrease 10% per year
start decline at 10% per year
start grow at 10% per year
increase 10%
7.
remain constant
decrease 10% per year
start decline at 10% per year
start grow at 10% per year
increase 10%
8. 1984, 1885, 1607, 1786
9. 1786,2182,1984,2292
10. depreciate 5%
depreciate 10%
appreciate 5%
appreciate 10%
neither appreciate nor depreciate.
5. Forecasting exchange rates using the simple model Aa Aa Assume that in the United Kingdom and South Korea, the real income growth rates are zero, and the money supply remains constant until July 1, 2010. Suppose that on June 30, 2010, the South Korean won/British pound exchange rate is EKRW/£ 1,984. Prices are perfectly flexible, meaning they adjust instantaneously to a change in the nominal supply of money. Use the simple monetary model (where L is a constant that measures how much demand for liquidity is generated for each dollar of nominal income) to answer the following questions. Suppose that on July 1, 2010, the money supply in South Korea experiences a one-time decline of 10% and remains constant at that level for at least one year. The money supply in the United Kingdom does not change. As a result, on July 1, 2010 (as compared to June 30), South Korea's real money balances will , and South Korea's price level will The South Korean won/British pound exchange rate (EKRW/E) will be on June 30, 2011. Thus,you can predict that over the period from July 1, 2010, to June 30, 2011, the South Korean won will on July 1, 2010, and Now, suppose that on July 1, 2010, instead of a one-time decline, the money supply in South Korea starts to grow at a rate of 10% per year. The money supply in the United Kingdom remains unchanged. As a result, on July 1, 2010, South Korea's real money balances will South Korea's price level will , and The exchange rate (EKRWE) will be predict that over the period from July 1, 2010, to June 30, 2011, the South Korean won will on July 1, 2010, and on June 30, 2011. Thus, you canExplanation / Answer
1 increase 10%
2 prices decrease 10%
3 2182
4 2182
5 neither appreciate nor depreciate
6 start to decline at 10 percent per year
7 start to grow at 10 percent per year
8 1786
9 1786
10 neither appreciate nor depreciate
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