Homework Answers
The third option is correct
A negative effect on trade balance is when exports fall and imports rise.
If the domestic currency appreciates, then exports would fall (exports are more expensive for foreigners) if export contracts are written in domestic currency. This is because each unit of foreign currency can buy lesser quantity of domestic currency.
If the domestic currency appreciates, then imports would rise (imports are cheaper for domestic residents) if import contracts are written in foreign currency. This is because each unit of domestic currency can buy higher quantity of foreign currency.
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A domestic currency appreciation could lead to an immediate negative effect on the trade balance, if...
Suppose that the U.S. considers devaluing its dollar against a foreign currency to improve the trade...
Suppose that the U.S. considers devaluing its dollar against a foreign currency to improve the trade balance. What type of currency contracting would definitely worsen the U.S. trade balance? O The U.S. import contracts are written in foreign currency and the U.S. export contracts are written in dollars. O The U.S. import contracts are written in dollars and the U.S. export contracts are written in foreign currency. O Both of the U.S. import and export contracts are written in dollars....
QUESTION 7 Select all that are true given an appreciation of the domestic currency: The carry...
QUESTION 7 Select all that are true given an appreciation of the domestic currency: The carry trade would arbitrage away the appreciation, ceteris paribus It would attract foreign investment in the domestic economy, ceteris paribus Foreign interest rates would fall, ceteris paribus The decrease in NX would mitigate the appreciation, ceteris paribus
1.Appreciation of the domestic currency will a. increase domestic aggregate demand. b. decrease domestic aggregate supply....
1.Appreciation of the domestic currency will a. increase domestic aggregate demand. b. decrease domestic aggregate supply. c. decrease domestic aggregate demand, and possibly increase domestic aggregate supply. d. cause a deterioration in the trade balance, but have no effect on aggregate supply or demand. 2.In the current exchange rate arrangements of IMF members, a. a substantial number of countries do not have a freely floating exchange rate. b. the European Union countries fix their exchange rates against the US dollar....
In the short run a currency depreciation can make a trade balance worse if a. there...
In the short run a currency depreciation can make a trade balance worse if a. there is no domestic producer of an import. b. there is no export market for a country's output. c. there is no domestic buyer for an import. d. none of the options.
According to the Interest Parity Condition, the following factors could lead to a Dollar Appreciation in...
According to the Interest Parity Condition, the following factors could lead to a Dollar Appreciation in the Short Term, EXCEPT: Question 29 options: An increase in domestic interest rates A decrease in foreign interest rates An expected future dollar depreciation An expected future decrease in domestic prices
6. The balance of payments is ..-(A) negative when the nation runs a trade deficit. (B)...
6. The balance of payments is ..-(A) negative when the nation runs a trade deficit. (B) positive when the nation runs a trade surplus. (C) negative when the country is a borrower in the international apital market. (D) positive when the country is a lender in the international capital market. (E) always equal to zero. 7. If the U.S. dollar increases in value relative to the British pound, (A) U.S. wheat will become cheaper in England. (3) British bicycles will...
What is the effect of a dollar appreciation against all foreign currencies? The current account balance...
What is the effect of a dollar appreciation against all foreign currencies? The current account balance decreases, and the trade balance increases. The current account balance and the trade balance are both unaffected. The current account balance and the trade balance both decrease. The current account balance and the trade balance both increase. The current account balance increases, and the trade balance decreases.
The following factors could lead to a Dollar Appreciation in the Long Run, EXCEPT: Question 26...
The following factors could lead to a Dollar Appreciation in the Long Run, EXCEPT: Question 26 options: Decrease in domestic prices. Increase in domestic productivity. Increase in demand for US exports. Increase in domestic interest rates
A decrease in domestic interest rates relative to interest rates in other countries may lead to, from the home c...
A decrease in domestic interest rates relative to interest rates in other countries may lead to, from the home currency and home country's perspectives, an exchange rate: depreciation and an increase in net exports O depreciation and a decrease in net exports. O appreciation and an increase in net exports. appreciation and a decrease in net exports. The Reserve Bank of Australia can increase the cash rate by: O borrowing from the banks using reverse repurchase agreements. O purchasing bonds...
DQuestion 36 2 pts The following table shows the number of U.S. dollars required to buy...
DQuestion 36 2 pts The following table shows the number of U.S. dollars required to buy one British pound and the number of U.S. dollars required to buy one euro between February 1, 2016, and September 1, 2016: U.S. Dollars Required U.S. Dollars to Buy 1 British Pound 1.429 Required to Buy 1 Euro 1.1092 Date February 1, 2016 March 1, 2016 1.425 April 1, 2016 1.432 May 1, 20161.452 June 1, 2016 1.420 July 1, 20161.313 August 1, 2016...
Suppose that the U.S. considers devaluing its dollar against a foreign currency to improve the trade balance. What type of currency contracting would definitely worsen the U.S. trade balance? O The U.S. import contracts are written in foreign currency and the U.S. export contracts are written in dollars. O The U.S. import contracts are written in dollars and the U.S. export contracts are written in foreign currency. O Both of the U.S. import and export contracts are written in dollars....
QUESTION 7 Select all that are true given an appreciation of the domestic currency: The carry trade would arbitrage away the appreciation, ceteris paribus It would attract foreign investment in the domestic economy, ceteris paribus Foreign interest rates would fall, ceteris paribus The decrease in NX would mitigate the appreciation, ceteris paribus
In the short run a currency depreciation can make a trade balance worse if a. there is no domestic producer of an import. b. there is no export market for a country's output. c. there is no domestic buyer for an import. d. none of the options.
6. The balance of payments is ..-(A) negative when the nation runs a trade deficit. (B) positive when the nation runs a trade surplus. (C) negative when the country is a borrower in the international apital market. (D) positive when the country is a lender in the international capital market. (E) always equal to zero. 7. If the U.S. dollar increases in value relative to the British pound, (A) U.S. wheat will become cheaper in England. (3) British bicycles will...
A decrease in domestic interest rates relative to interest rates in other countries may lead to, from the home currency and home country's perspectives, an exchange rate: depreciation and an increase in net exports O depreciation and a decrease in net exports. O appreciation and an increase in net exports. appreciation and a decrease in net exports. The Reserve Bank of Australia can increase the cash rate by: O borrowing from the banks using reverse repurchase agreements. O purchasing bonds...
DQuestion 36 2 pts The following table shows the number of U.S. dollars required to buy one British pound and the number of U.S. dollars required to buy one euro between February 1, 2016, and September 1, 2016: U.S. Dollars Required U.S. Dollars to Buy 1 British Pound 1.429 Required to Buy 1 Euro 1.1092 Date February 1, 2016 March 1, 2016 1.425 April 1, 2016 1.432 May 1, 20161.452 June 1, 2016 1.420 July 1, 20161.313 August 1, 2016...
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