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d. What does it mean when a country’s currency
e. Who wins and who loses in an economy when its currency devaluates in the foreign exchange market?
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- In the foreign exchange market, when the U.S. interest rate rises, the supply of dollars ________ and the foreign exchange rate ________. A. decreases; rises B. increases; falls C. increases; rises D. increases; does not change E. decreases; falls3. What will happen to a country that fixes the price of foreign exchange below equilibrium?Which of the following companies would gain from foreign currency depreciation? a. Companies that export goods and services. b. Companies that buy bonds issued by the foreign government. c. Companies that borrow in foreign currency. d. Companies that invest in the foreign equity markets.
- What effect would a devaluation of a country's currency most likely have on its export volumes? A. Export volumes would decrease, as goods become more expensive in foreign markets. B. Export volumes would increase, as goods become cheaper in foreign markets. C. Export volumes would remain unchanged, as currency value does not affect trade. D. Export volumes would initially decrease, but then increase over time due to adjustments in trade agreements.1. Use the model of the small open economy to predict what would happen to the trade balance, the real exchange rate, and the nominal exchange rate in response to each of the following events. a. A fall in consumer confidence about the future induces consumers to spend less and save more. b. A tax reform increases the incentive for businesses to build new factories. c. The introduction of a stylish line of Toyotas makes some consumers prefer foreign cars over domestic cars. d. The central bank doubles the money supply. e. New regulations restricting the use of credit cards increase the demand for money. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.a. Define the concept of equilibrium in the foreign exchange market, from an Australian perspective, using Australian dollars (AUD) and New Zealand dollars (NZD) as your currencies. Explain the factors that might bring about a fall in the exchange rate. b. What is the likely impact on Australia’s economy of a fall in the exchange rate and what can be done to prevent this from happening?
- What impact does a depreciation of a country's currency have on its balance of trade? A. It increases the price of exports and decreases the price of imports, worsening the balance of trade. B. It decreases the price of exports and increases the price of imports, improving the balance of trade. C. It increases the price of exports and decreases the price of imports, improving the balance of trade. D. It decreases the price of exports and increases the price of imports, worsening the balance of trade.An increase in U.S. interest rates relative to German interest rates would likely ____ the U.S. demand for euros and ____ the supply of euros for sale. A. reduce; increase B. increase; reduce C. reduce; reduce D. increase; increase(A) Government spending rises to 1,250. Compute the investment, trade balance, national savings and the equilibrium exchange rate and illustrate graphically. (B) Suppose that the world interest rate rises from 5 to 10 percent (G is again 1,000). Solve for national saving, investmentm trade balance and the equilibrium exchange rate. Explain what you find compared to part (A) and explain graphically.
- 1. Use the model of the small open economy to predict what would happen to the trade balance, the real exchange rate, and the nominal exchange rate in response to each of the following events. a. A fall in consumer confidence about the future induces consumers to spend less and save more. b. The introduction of a stylish line of Toyotas makes some consumers prefer foreign cars over domestic cars. c. New regulations restricting the use of credit cards increase the demand for money.In some cases, governments will intervene in the currency markets to incresae or decrease the value of the country's currency. Which of the following is an example of direct intervention in foreign exchange markets? A. The European Central Bank lowers interest rates to increase the value of the euro. B. The Japanese government purchasing JPY with USD to increase the value of the Japanese yen. C. China imposing barriers on imports from Europe. D. The U.S. lowers interest rates to decrease the value of the U.S. dollar.5. How exchange rates can affect a firm’s global sales.?