On March 11, 2011 a devastating earthquake and subsequent tsunami struck Japan, causing widespread destruction. Very often, people associate “bad event = currency depreciation”. This is not always logical. Immediately following the earthquake, the value of the Yen spiked up to 75 ($0.0133 / ¥). A suggested primary reason was the repatriation of insurance proceeds. In order to pay insurance claims, insurers had to sell off assets held abroad and bring the proceeds to Japan.
Describe, in economic terms, why this spike was taking place – describing or attaching a Microeconomic P and Q (supply / demand) graph would be useful. What would be the impact on HP Inc. operations and printer profitability? Would this impact be significantly realized in HP Inc. profitability in 2011? Why or why not?
The increase in demand for currency(Yen) makes the demand curve to shift rightward, which finally cause a rise in exchange rate and thus increases the value of currency demanded(Yen). As may be suggested, the primary reason could be the repatriation of insurance proceeds. Other possible reasons would be an economic stress in the short run due to the economic losses out of the earthquake, direct and indirect, like reconstruction and rehabilitation etc.
A bad event like an earthquake would adversely affects the profitability of HP Inc. for sure, because when people do not have money with them, the demand for such kind of goods would normally be low. Rather demand for essential goods like food, would be in high demand, consequently, such a demand for goods increases the demand for the currency. Since the HP's office in Sendai, was close to the earthquake's epicenter, it sustained interior damage and remained closed. Thus, it is clear that such an event would have definitely affected the profitability of HP Inc. in 2011.
On March 11, 2011 a devastating earthquake and subsequent tsunami struck Japan, causing widespread destruction. Very...
On March 11, 2011 a devastating earthquake and subsequent tsunami struck Japan, causing widespread destruction. Very often, people associate “bad event = currency depreciation”. This is not always logical. Immediately following the earthquake, the value of the Yen spiked up to 75 ($0.0133 / ¥). A suggested primary reason was the repatriation of insurance proceeds. In order to pay insurance claims, insurers had to sell off assets held abroad and bring the proceeds to Japan. Describe, in economic terms, why...
On March 11, 2011, Japan was hit by a 9.0 magnitude earthquake, which subsequently produced a devastating tsunami. The effects of these events were numerous, including entire towns being washed away, nearly 500,000 people displaced, a nuclear power plant left in critical condition, and thousands of lives tragically lost. The earthquake was one of the largest in modern history, and though hard to estimate, could cost nearly $300 billion to clean up. Your group currently has a plant in Japan....