If a nation faces high (above one in absolute value) price elasticities of demand for exports...
If a nation faces high (above one in absolute value) price elasticities of demand for exports and imports what should it do to the exchange rate? If , on the other hand, the nation faces low elasticities of exports and imports (their sum being less than the absolute value of one) how should it influence its exchange rate
Homework Answers
If a nation faces elastic demand foe import and export, the trade balance of the country would improve and there will be depreciation of the currency as there will be more demand for the currency, On the other hand, if we have goods that are inelastic, then the trade balance would worsen as result of which the currency would appreciate as the demand for currency declines. These relationships can be linked to marshall lerner conditions which says that total expenditure would increase when price of a good is greater than 1 and vice versa.
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If a nation faces high (above one in absolute value)
price elasticities of demand for exports...
A linear downward-sloping demand curve has price elasticities (in absolute values) that increase as price decreases....
A linear downward-sloping demand curve has price elasticities (in absolute values) that increase as price decreases. remain constant along the demand curve. decrease as price decreases. are greater than or equal to 1. Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand? 0,11 0.37 9.33...
(45 of 57) To influence the value of its currency, the government of a nation can...
(45 of 57) To influence the value of its currency, the government of a nation can impose restrictions to reduce imports or other measures can be taken domestically to increase exports or decrease imports. True False SAVE ANSWER SKIP QUESTION (47 of 57) The total GDP of the United States was approximately $17.4 trillion in 2014 and the Xn was approximately billion. + 800 9,000 negative 800 3,000 (48 of 57) Central banks of a nation hold s well as...
Price Demand Quantity Refer to the figure above, the absolute value of the price elasticity of...
Price Demand Quantity Refer to the figure above, the absolute value of the price elasticity of demand at points a and bis 1. What is the value of Pb? A) $50 B) $40 C) $30 D) $20 Price Quantity 11. Referring to the figure above, as price falls from PA to PB, the quantity demanded increases the most along D1, therefore A) D1 is unit elastic. B) Dj is more inelastic than D2 or D3. C) Dj is more elastic...
1. Which of the following statements is true? a. If the price elasticity of demand for...
1. Which of the following statements is true? a. If the price elasticity of demand for exports plus the price elasticity of demand for imports is greater than 1, a depreciation in a currency will improve the current account on the balance of payments b. If the price elasticity of demand for exports plus the price elasticity of demand for imports is equal to 1, a depreciation in a currency will improve the current account on the balance of payments...
Problem 25-09 (algo) An economy with zero net exports is described below: C = 30 +...
Problem 25-09 (algo) An economy with zero net exports is described below: C = 30 + 0.9 (Y-T) P = 100 G = 150 NX = 0 T = 180 The multiplier in this economy is 10. a. Find short-run equilibrium output. Instructions: Enter your responses as whole numbers. Short-run equilibrium output: b. Economic recovery abroad increases the demand for the country's exports; as a result, NX rises to 25. Short-run equilibrium output (Click to select) to . C. Assume...
9. Comparative advantage is defined in terms of: efficiency. absolute advantage. opportunity cost. specialization. 10. David...
9. Comparative advantage is defined in terms of: efficiency. absolute advantage. opportunity cost. specialization. 10. David can wash four cars in one hour or cut two lawns. Ralph can wash three cars in one hour or cut two lawns. David's opportunity cost for cutting one lawn is car washes, and Ralph's opportunity cost for cutting one lawn is car washes. a. 2; 1.5 4; 3.5 1.5; 2 d. 3.5; 4 11. Gains from trade are based on rather than: opportunity...
(1) If the world price is above the domestic equilibrium price, the domestic country is likely...
(1)
If the world price is above the domestic equilibrium price, the
domestic country is likely to ____________________ the good.
(2)
The difference between what an economy sells to and buys from
foreigners is _________________.
(3)
The idea that exchange rates and prices adjust to equalize the
cost of living across international boundaries is called
__________________________.
(4)
In the graph below, when the world price is $3, how many units
are...
How would aggregate demand change if foreign incomes increase and the exchange rate value of the...
How would aggregate demand change if foreign incomes increase and the exchange rate value of the dollar increases? a. Neither change would affect aggregate demand. b. The increase in income would decrease aggregate demand; the increase in the exchange rate would increase aggregate demand. c. The increase in income would increase aggregate demand; the increase in the exchange rate would decrease aggregate demand. d. Both changes would decrease aggregate demand If the exchange rate value of the dollar depreciates relative...
Question 26 One way to avoid protectionist restrictions would be to privatization make the last significant...
Question 26 One way to avoid protectionist restrictions would be to privatization make the last significant change to the product here in the US impose tariffs do away with quotas Question 27 The negative impact of protectionism is when M decrease due to higher US producer prices politicians lose their jobs jobs are lost in the protected industry P increases in the protected industry causing less C in other industries Question 28 Which of the following facts is true about...
15.Demand tends to be more elastic when A. price is high, and more inelastic when price...
15.Demand tends to be more elastic when A. price is high, and more inelastic when price is low. B. price is low, and more inelastic when price is high. C. the demand curve is very steep. D. the quantity demanded is larger. 16.If increasing the admission charge for National Parks increases the National Park Service’s total revenue, then the demand for National Park visits is A.inelastic. B.elastic, but not perfectly elastic. C.perfectly elastic. D.a perfectly horizontal line. 20. When consumers’...
A linear downward-sloping demand curve has price elasticities (in absolute values) that increase as price decreases. remain constant along the demand curve. decrease as price decreases. are greater than or equal to 1. Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand? 0,11 0.37 9.33...
(45 of 57) To influence the value of its currency, the government of a nation can impose restrictions to reduce imports or other measures can be taken domestically to increase exports or decrease imports. True False SAVE ANSWER SKIP QUESTION (47 of 57) The total GDP of the United States was approximately $17.4 trillion in 2014 and the Xn was approximately billion. + 800 9,000 negative 800 3,000 (48 of 57) Central banks of a nation hold s well as...
Price Demand Quantity Refer to the figure above, the absolute value of the price elasticity of demand at points a and bis 1. What is the value of Pb? A) $50 B) $40 C) $30 D) $20 Price Quantity 11. Referring to the figure above, as price falls from PA to PB, the quantity demanded increases the most along D1, therefore A) D1 is unit elastic. B) Dj is more inelastic than D2 or D3. C) Dj is more elastic...
Problem 25-09 (algo) An economy with zero net exports is described below: C = 30 + 0.9 (Y-T) P = 100 G = 150 NX = 0 T = 180 The multiplier in this economy is 10. a. Find short-run equilibrium output. Instructions: Enter your responses as whole numbers. Short-run equilibrium output: b. Economic recovery abroad increases the demand for the country's exports; as a result, NX rises to 25. Short-run equilibrium output (Click to select) to . C. Assume...
9. Comparative advantage is defined in terms of: efficiency. absolute advantage. opportunity cost. specialization. 10. David can wash four cars in one hour or cut two lawns. Ralph can wash three cars in one hour or cut two lawns. David's opportunity cost for cutting one lawn is car washes, and Ralph's opportunity cost for cutting one lawn is car washes. a. 2; 1.5 4; 3.5 1.5; 2 d. 3.5; 4 11. Gains from trade are based on rather than: opportunity...
(1)
If the world price is above the domestic equilibrium price, the
domestic country is likely to ____________________ the good.
(2)
The difference between what an economy sells to and buys from
foreigners is _________________.
(3)
The idea that exchange rates and prices adjust to equalize the
cost of living across international boundaries is called
__________________________.
(4)
In the graph below, when the world price is $3, how many units
are...
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