RUBLES PER KRONE RUBLES PER KRONE 3. Changes in the foreign exchange market The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose a recession in Russia causes Russian incomes to decrease, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. Note: Select and drap one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Supply of Kraner Demand for Kraner Demand for Kroner QUANTITY OF KRONER Supply of Kroner ? The decrease in Russian Incomes causes the Danish krone to relative to the Danish krone. relative to the Russian ruble and causes the Russian ruble to Suppose the price level in Denmark rises by 12%, while the price level in Russia remains the same. That is, the inflation rate in Denmark is higher than in Russia. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner. Russian ruble to Supply of Kroner Demand for Kraner Demand for Kraner QUANTITY OF KRONER Supply of Kroner ? Suppose the real Interest rates in Russia and Denmark are initially the same. Then the real Interest rate in Denmark falls, while the real interest rate In Russia remains the same. This will cause the supply of kroner to and the demand for kroner to which causes the relative to the Danish krone.
RUBLES PER KRONE RUBLES PER KRONE 3. Changes in the foreign exchange market The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one krone. Suppose a recession in Russia causes Russian incomes to decrease, while incomes in Denmark remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal. Note: Select and drap one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Supply of Kraner Demand for Kraner Demand for Kroner QUANTITY OF KRONER Supply of Kroner ? The decrease in Russian Incomes causes the Danish krone to relative to the Danish krone. relative to the Russian ruble and causes the Russian ruble to Suppose the price level in Denmark rises by 12%, while the price level in Russia remains the same. That is, the inflation rate in Denmark is higher than in Russia. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner. Russian ruble to Supply of Kroner Demand for Kraner Demand for Kraner QUANTITY OF KRONER Supply of Kroner ? Suppose the real Interest rates in Russia and Denmark are initially the same. Then the real Interest rate in Denmark falls, while the real interest rate In Russia remains the same. This will cause the supply of kroner to and the demand for kroner to which causes the relative to the Danish krone.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter34: International Finance
Section: Chapter Questions
Problem 5QP
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Transcribed Image Text:RUBLES PER KRONE
RUBLES PER KRONE
3. Changes in the foreign exchange market
The following questions focus on the exchange rate between the Russian ruble and the Danish krone. Assume the exchange rate is flexible. The
exchange rate is defined as the number of rubles you must pay for one krone.
Suppose a recession in Russia causes Russian incomes to decrease, while incomes in Denmark remain the same.
Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all other things remain equal.
Note: Select and drap one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back
to its original position, just drag it a little farther.
Supply of Kraner
Demand for Kraner
Demand for Kroner
QUANTITY OF KRONER
Supply of Kroner
?
The decrease in Russian Incomes causes the Danish krone to
relative to the Danish krone.
relative to the Russian ruble and causes the Russian ruble to
Suppose the price level in Denmark rises by 12%, while the price level in Russia remains the same. That is, the inflation rate in Denmark is higher
than in Russia.
Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner.
Russian ruble to
Supply of Kroner
Demand for Kraner
Demand for Kraner
QUANTITY OF KRONER
Supply of Kroner
?
Suppose the real Interest rates in Russia and Denmark are initially the same. Then the real Interest rate in Denmark falls, while the real interest rate
In Russia remains the same. This will cause the supply of kroner to
and the demand for kroner to
which causes the
relative to the Danish krone.
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