The equilibrium exchange rate of pounds is $1.70. At an exchange rate of $1.68 per pound,...
The equilibrium exchange rate of pounds is $1.70. At an exchange rate of $1.68 per pound, U.S. demand for pounds would ________ the supply of pounds for sale and there would be a _______ of pounds in the foreign exchange market.
| a. |
be equal to; shortage |
|
| b. |
exceed; shortage |
|
| c. |
be less than; shortage |
|
| d. |
exceed; surplus |
|
| e. |
be less than; surplus |
Homework Answers
The correct answer is B
As the per pound exchange rate is less than the equilibrium price then the US demand for pound would be more than the supply of pound. It will create the deficit and there would be shortage of pound in the foreign excahnge market.
Add Answer to:
The equilibrium exchange rate of pounds is $1.70. At an exchange
rate of $1.68 per pound,...
Exchange rate (U.S. cents per Canadian dollar) 120 Draw a demand for dollars curve. Label it...
Exchange rate (U.S. cents per Canadian dollar) 120 Draw a demand for dollars curve. Label it D. Draw a supply of dollars curve. Label it S. Draw a point at the equilibrium quantity and equilibrium exchange rate. Draw an arrow between the D and S curves that indicates a price at which there is a surplus of dollars. Label it. O O O 1104 When there is a surplus of dollars in the foreign exchange market, _ 1007 O A....
eGraph the supply and demand curves for tablet devices using the information in the table. What...
eGraph the supply and demand curves for tablet devices using the information in the table. What are the equilbrim price and 120 million quantity? 30- In Exhibit 7, If the industry price is $340, is there a shortage or surplus of ablet devices? How much is the shortage or surplus? 31- Suppose that in a later market period, the quantities supplied in the Exhibit S are unchanged. The amount however, has increased by 30 million at each price.Construct the resulting...
If equilibrium for interest rate is 8% and a bank is offering loans at 5% then...
If equilibrium for interest rate is 8% and a bank is offering loans at 5% then what will occur based on the supply and demand model? Group of answer choices A. there will be a surplus of loanable funds B. there will be a shortage of loanable funds C. the demand for loanable funds will equal the supply of loanable funds D. the demand for loanable funds will be less than the supply of loanable funds Which of the following...
The graph shows the foreign exchange market. Draw a point at the equilibrium exchange rate and...
The graph shows the foreign exchange market. Draw a point at the equilibrium exchange rate and the equilibrium quantity of dollars. Draw a horizontal line at a price at which there is a surplus of dollars. Label it Surplus. Draw an arrow that shows the change in the quantity demanded as the foreign exchange market moves from the price at which you have indicated the surplus toward equilibrium. Label it 1. Exchange rate (yen per U.S. dollar) 1.4 1.5 1.6
1. If a fixed exchange rate is set below the equilibrium rate in a fixed exchange...
1. If a fixed exchange rate is set below the equilibrium rate in a fixed exchange rate system it will create a deficit in the balance of payments. a surplus in the balance of payments. inflation. deflation. 2. Which of the following items is not a flow? A.Unilateral transfers. B. The increase in foreign assets held by Australian investors over a period of six months. C. Foreign exchange reserves lost by the Reserve Bank as a result of intervention in...
Figure 2.3: The Market for British Pounds S (£) D2(£) *D(£) D3(L) Q3 Quantities of pound...
Figure 2.3: The Market for British Pounds S (£) D2(£) *D(£) D3(L) Q3 Quantities of pound Q5 Qu Q1 Q2 Refer to Figure 2.3. Suppose that the spot exchange rate of British pound is $2.00 per pound. Suppose that the U.S. decreases its taste for imports from the U.K. Under a flexible exchange rate system, the Bank of England will: Let the British pound depreciate Let the British pound appreciate Sell pounds and buy dollars in foreign exchange market Sell...
Figure 19-7 Exchange $4 2.0 2.3 2.7 pounds traded (millions per day) Refer to Figure 19-7....
Figure 19-7 Exchange $4 2.0 2.3 2.7 pounds traded (millions per day) Refer to Figure 19-7. Under the Bretton Woods System of exchange rates, if the par exchange rate was $4 per pound in the figure above, then which of the following is true? The Bank of England would have to buy 0.7 million pounds per day with dollars. ( There is a shortage of pounds equal to 0.7 million. The Bank of England would have to sell 0.7 million...
The graph below shows demand and supply curves for U.S. dollars in the foreign exchange market. As...
The graph below shows demand and
supply curves for U.S. dollars in the foreign exchange
market. As you can see, the exchange rate (in terms of
foreign currency units per dollar) is initially equal to
E0.
Suppose that next year there’s
a huge increase in the number of foreigners – from Europe, China,
and everywhere else – who decide to visit the U.S. as
tourists.
How would this huge increase in tourism in the U.S. affect the
exchange rate? To answer this,...
11. We have a flexible exchange rate system, in equilibrium and with the balance of trade...
11. We have a flexible exchange rate system, in equilibrium and with the balance of trade in balance. Relative to Japan, the U.S. interest rate rises. The U.S. can expect to see a(n) __________ in the value of the dollar and a _______ on its balance of trade. A. appreciation; surplus B. appreciation; deficit C. depreciation; surplus D. depreciation; deficit 12. We have a flexible exchange rate system, in equilibrium and with the balance of trade in balance. Relative to...
2. You are given the following information. The current dollar-pound exchange rate is $2 per pound....
2. You are given the following information. The current dollar-pound exchange rate is $2 per pound. A U.S. basket that costs S100 would cost $120 in the United Kingdom. For the next year, the Fed is predicted to keep U.S. inflation at 2% and the Bank of England is predicted to keep UK. inflation at 3%. The speed of convergence to absolute PPP is 15% per year. A. What is the expected U.S. minus U.K. inflation differential for the coming...
Exchange rate (U.S. cents per Canadian dollar) 120 Draw a demand for dollars curve. Label it D. Draw a supply of dollars curve. Label it S. Draw a point at the equilibrium quantity and equilibrium exchange rate. Draw an arrow between the D and S curves that indicates a price at which there is a surplus of dollars. Label it. O O O 1104 When there is a surplus of dollars in the foreign exchange market, _ 1007 O A....
eGraph the supply and demand curves for tablet devices using the information in the table. What are the equilbrim price and 120 million quantity? 30- In Exhibit 7, If the industry price is $340, is there a shortage or surplus of ablet devices? How much is the shortage or surplus? 31- Suppose that in a later market period, the quantities supplied in the Exhibit S are unchanged. The amount however, has increased by 30 million at each price.Construct the resulting...
The graph shows the foreign exchange market. Draw a point at the equilibrium exchange rate and the equilibrium quantity of dollars. Draw a horizontal line at a price at which there is a surplus of dollars. Label it Surplus. Draw an arrow that shows the change in the quantity demanded as the foreign exchange market moves from the price at which you have indicated the surplus toward equilibrium. Label it 1. Exchange rate (yen per U.S. dollar) 1.4 1.5 1.6
Figure 2.3: The Market for British Pounds S (£) D2(£) *D(£) D3(L) Q3 Quantities of pound Q5 Qu Q1 Q2 Refer to Figure 2.3. Suppose that the spot exchange rate of British pound is $2.00 per pound. Suppose that the U.S. decreases its taste for imports from the U.K. Under a flexible exchange rate system, the Bank of England will: Let the British pound depreciate Let the British pound appreciate Sell pounds and buy dollars in foreign exchange market Sell...
Figure 19-7 Exchange $4 2.0 2.3 2.7 pounds traded (millions per day) Refer to Figure 19-7. Under the Bretton Woods System of exchange rates, if the par exchange rate was $4 per pound in the figure above, then which of the following is true? The Bank of England would have to buy 0.7 million pounds per day with dollars. ( There is a shortage of pounds equal to 0.7 million. The Bank of England would have to sell 0.7 million...
The graph below shows demand and
supply curves for U.S. dollars in the foreign exchange
market. As you can see, the exchange rate (in terms of
foreign currency units per dollar) is initially equal to
E0.
Suppose that next year there’s
a huge increase in the number of foreigners – from Europe, China,
and everywhere else – who decide to visit the U.S. as
tourists.
How would this huge increase in tourism in the U.S. affect the
exchange rate? To answer this,...
2. You are given the following information. The current dollar-pound exchange rate is $2 per pound. A U.S. basket that costs S100 would cost $120 in the United Kingdom. For the next year, the Fed is predicted to keep U.S. inflation at 2% and the Bank of England is predicted to keep UK. inflation at 3%. The speed of convergence to absolute PPP is 15% per year. A. What is the expected U.S. minus U.K. inflation differential for the coming...
Most questions answered within 3 hours.
-
The Problem: The Case of the Harmonizing Vacations
Your CEO is exploring partnering with a European...
asked 41 minutes ago -
A chemical equation is balanced by adding coefficients in front
of some formulas so that the...
asked 40 minutes ago -
From the literature (reference your sources): What are the
lattice parameters of calcite and aragonite? Why...
asked 1 hour ago -
Your system is rejecting the question am asking which is
preceded by a case study. It...
asked 1 hour ago -
3. On January 2, 2000, Larry creates a trust with himself as
trustee. Larry as trustee...
asked 1 hour ago -
A member of the volleyball team spikes the ball. During this
process, she changes the velocity...
asked 1 hour ago -
Are adult gamers less likely to use a gaming console (Xbox,
PlayStation, Wii, etc...) than teen...
asked 2 hours ago -
The University of
Texas recently reported that 43% of college students aged 18-24
would spend their...
asked 2 hours ago -
The length of stay at a specific emergency department in
Phoenix, Arizona, in 2009 had a...
asked 1 hour ago -
. Please give the mechanism for this type of problem. Step by
Step
The toxin that...
asked 1 hour ago -
If you have a 1M stock solution and you want to dilute 1 :10
with water,...
asked 1 hour ago -
In a load instruction, the effective address is obtained by
A) Retriving the address from a...
asked 1 hour ago