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 8RQ
To determine
The impact of the floating exchange rate on official reserve and balance of payment.
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Students have asked these similar questions
Which of the following statements is true of a flexible exchange rate system?
O A. Market forces tend to undervalue a currency over time.
O B.
Market forces tend to push the exchange rate of a currency to market clearing levels over time.
Market forces do not affect exchange rates between different currencies.
O C.
O D. Market forces tend to overvalue a currency over time.
If the ratio of the dollar price of a U.S. toy to the dollar price of the same toy sold in China is greater than one, retailers in the United States should
O A. should not buy the toys from both Chinese suppliers and U.S. suppliers
O B. buy the toys from Chinese suppliers
O C. buy the toys from both Chinese suppliers and U.S. suppliers
O D. buy the toys from American suppliers
Which of the following is likely to be true of the nominal and the real exchange rates in the short run and in the long run if prices in two countries do not
respond to exchange rate changes?
O A. The real and the nominal exchange rates between…
Which is an incorrect statement about the balance of payments accounts?
O A. Any transaction involving a flow of funds out of a country is a negative item in the country's balance of payments.
B. The balance of payments accounts consist of the current account and the financial account.
c. The financial account measures a country's trade in currently produced goods and services.
O D. Any transaction involving a flow of funds into a country is a positive item in the country's balance of payments.
Suppose that a Big Mac in the US costs $3.15 and 2.99 Bolivianos in Bolivia. The currency exchange
rate is $1 US buys 6.54 Bolivianos. According to the law of one price, the exchange rate should be
$1 US buys Bolivianos and so, over time, the US dollar should
O 0.95; appreciate
O 0.95; depreciate
9.49; appreciate
9.49; depreciate
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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Similar questions
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- Assume that the U.S. interest rate is 12 percent, while the British interest rate is 15 percent. If interest rate parity exists, then: O a.U.S. investors will earn 12 percent whether they use covered interest arbitrage or invest in the United States. O b. U.S. investors will earn a higher rate of return when using covered interest arbitrage than what they would earn in the United States. O c. British investors who invest in the United Kingdom will achieve the same return as U.S. investors who invest in the United States. O d. U.S. investors will earn 15 percent whether they use covered interest arbitrage or invest in the United States.arrow_forwardCan a currency experience a nominal depreciation and a real appreciation at the same time? O A. Yes, if domestic inflation is sufficiently lower than foreign inflation O B. No, unless the nominal exchange rate decreases O C. Yes, if domestic inflation is sufficiently higher than foreign inflation O D. Noarrow_forwardIf the U.S. current-account deficit in 2021 is $965.4495 billion, a. the U.S. capital-account deficit in 2021 will be $965.4495 billion O b. the U.S. capital-account surplus in 2021 will be $965.4495 billion O c. we have no way to know, from the information contained in the question, what the U.S. capital-account will be in 2021 O d. DO NOT CHOOSE THIS ANSWER.arrow_forward
- How will an increase in foreign direct investment in the hotel industry affect the market for foreign exchange? Select one: O a. Outward shift of the demand curve; real exchange rate rises. O b. Inward shift of the demand curve; real exchange rate falls. c. Inward shift of the supply curve; real exchange rate rises. O d. Inward shift of the demand curve; real exchange rate rises O e. Outward shift of the supply curve; real exchange rate falls.arrow_forwardIf Canadian exports of goods and services were $37 billion, imports of goods and services were $42 billion, transfers by Canadians to foreigners were $3 billion and transfers from foreigners to Canadian citizens were $2 billion, then the current account balance would be O A. $4 billion. O B. - $6 billion. O C. $8 billion O D. $6 billion. O E. - $4 billion.arrow_forwardThe economy of Singapore is experiencing high economic growth. How will this growth affect inflation and exchange rates? O a. increase in inflation and a stronger currency O b. lower inflation and a weaker currency O c. lower inflation and a stronger currency O d. increase in inflation and a weaker currencyarrow_forward
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