Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 21, Problem 2P
To determine
The balance on the financial account.
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Assume all transactions are between private individuals. A U.S. citizen buys a Japanese bond. This transaction will be entered in the US balance of payments as _______________.
a) an increase in investment income and an increase in foreign private assets in the US
b) a decrease in private US assets abroad and an increase in foreign private assets in the US
c) an increase in imports and an increase in foreign private assets in the US
d) an increase in private US assets abroad and an increase in foreign private assets in the US
Say that in Miami, in Coral Gables, a big mac cost $4.25 and a large fries cost $2.50. In Japan, the total cost of a big mac and
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11. Suppose that the nominal exchange rate between the euro and the British pound
was €0.80 per £1.0 last year, one unit of German output cost €4.0 last year, and one unit of
British output cost £6.0 last year.
a. What was last year's real exchange rate between the U.K. and Germany, expressed as the
cost of British output (i.e. - the quantity of German output that exchanges for 1 unit of
British output)? In which country were goods more expensive last year?
b. Suppose that between last year and this year the British pound depreciated by 25% against
the euro (a 25% decrease in the number of euros required to buy 1 pound). If the price of
goods in the U.K and Germany are unchanged from last year, what is this year's new real
exchange rate? In which country are goods more expensive this year?
Now suppose, instead, that between last year and this year, the pound depreciated by 25%
against the euro and Germany experienced a 40% decrease in its price level (a 40%
decrease in the number of…
Chapter 21 Solutions
Macroeconomics
Ch. 21.1 - Prob. 1QQCh. 21.1 - Prob. 2QQCh. 21.1 - Prob. 3QQCh. 21.1 - Prob. 4QQCh. 21.A - Prob. 1ADQCh. 21.A - Prob. 1ARQCh. 21.A - Prob. 1APCh. 21 - Prob. 1DQCh. 21 - Prob. 2DQCh. 21 - Prob. 3DQ
Ch. 21 - Prob. 4DQCh. 21 - Prob. 5DQCh. 21 - Prob. 6DQCh. 21 - Prob. 7DQCh. 21 - Prob. 8DQCh. 21 - Prob. 9DQCh. 21 - Prob. 10DQCh. 21 - Prob. 11DQCh. 21 - Prob. 1RQCh. 21 - Prob. 2RQCh. 21 - Prob. 3RQCh. 21 - Prob. 4RQCh. 21 - Prob. 5RQCh. 21 - Prob. 6RQCh. 21 - Prob. 7RQCh. 21 - Prob. 8RQCh. 21 - Prob. 9RQCh. 21 - Prob. 10RQCh. 21 - Prob. 1PCh. 21 - Prob. 2PCh. 21 - Prob. 3PCh. 21 - Prob. 4PCh. 21 - Prob. 5P
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