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Exchange Rates

Interest rates

How do changes in interest rates, inflation, productivity, and income affect exchange rates? Is a strong U.S. dollar always good for the U.S. and global economies? Why or why not?

Assessing the Foreign Exchange Market

A bicycle manufactured in the United States costs $100. Using the exchange rates listed in the table to the right, what would the bicycle cost in each of the following countries? a) Argentina b) Britain c) Canada Country U.S. $ per Currency Currency per U.S. $ Argentina (peso)

A black market

A black market is: a)Something that happens when producers sell goods for a greater price than the government mandated price ceiling. b)A characteristic of a surplus or excess supply condition. c)Legal but frowned upon by economists who feel it violates consumer sovereignty. d)None of the above. The marginal rate

Calculating Negative NPV

A. Calculate the NPV of the wildcat oil well, taking account of the probability of a dry hole, the shipping costs, the decline in production, and the forecasted increase in oil prices. b. How long does production have to continue for the well to be a positive NPV investment? How did you figure out your answer, i.e., what a

Exchange Rates of the U.S. Dollar

A bicycle manufactured in the United States costs $100. Using the exchange rates listed in Table 1, what would the bicycle cost in each of the following countries? a. Argentina b. Britain c. Canada What is the price of 1 U.S. dollar in terms of each of the following currencies, given the following exchange rates in table

Suppose the U.S. dollar price of a British pound is $1.50

1) Suppose the U.S. dollar price of a British pound is $1.50; the dollar price of a euro is $1; a hotel room in London, England, costs 120 British pounds; and a comparable hotel room in Hanover, Germany, costs 200 euro. a. Which hotel room is cheaper for a U.S. tourist? b. What is the exchange rate between the euro and the B

interest rate and present value problems

1. Click on the following web link and determine the change in the CPI between 1971 to 1981 and the period 1991 to 2001. http://www.minneapolisfed.org/index.cfm By what percentage did the CPI increase over each of these two 10-year periods? If you were earning $5.50 per hour in 1971 and your wages were $11.00 in 1981, by

Results of Exchange Rate Changes

Early in September 1983, it took 245 Japanese yen to equal $1. More than 20 years later that exchange rate had fallen to 108 yen to $1. Assume the price of a Japanese-manufactured automobile was $8,000 in September 1983 and that its price changes were in direct relation to exchange rates. a. Has the price, in dollars, of automo

Cross Rates

Suppose the exchange rate between U.S, dollars and the Swiss franc was SFr1.6=$1, and the exchange rate between U.S dollars and British pound was L1=$1.50. What was the cross rate between francs and pounds?

Cross Rates

A currency trader observes that in the spot exchange market, 1 U.S. dollar can be exchanged for 9 Mexican pesos or for 111.23 Japanese yen. What is the cross rate between the yen and the peso; that is, how many yen would you receive for every peso exchanged?

Foreign Exchange Rate Problem

Please help with the following problems. The U. K. pound is trading at 1.82 U.S. dollars per U.K. pound. There is purchasing power parity at this exchange rate. The interest rate in the U.S. is 2.5 percent a year and the interest rate in the U.K. is 3 percent a year. a. Calculate the U.S. interest rate differential. b. W

French Franc to a Dollar

1. Suppose the value of the French Franc in terms of the dollar is 50 on October 12, and 44 on October 17? By how much has the Franc appreciated or depreciated against the dollar? 2. Suppose the value of French Franc in terms of the dollar is 40 on October 12 and 45 on October 17. By how much has the Franc appreciated or depr

International and Balance of Payment in the Macro Economy

1. Suppose the value of the French Franc in terms of the dollar is: 50 on October 12 , and 44 on October 17. By how much has the Franc appreciated or depreciated against the dollar? Choose: Appreciation or Depreciation. By what percentage? 2. Suppose the Value of French Franc in terms of the dollar is 40 on October 12 and 4

Real Interest Rate

Can someone help me in calculating the current real interest rate? I know the formula is: Real interest rate = nominal interest rate - inflation rate. I am getting confused on whether I should use the published inflation rate for January or would it be a different number. I am also confused on what nominal interest rate t

What factors cause changes in exchange rates?

What factors cause changes in exchange rates? How do these factors cause a currency to appreciate or depreciate? What impact would a depreciating currency have on the current account balance?

Macroeconomics Measures

1. The following table lists the stages required in the production of a personal computer. What is the value of the computer in the GDP? Stage Value Added Components manufacture $50 Assembly $250 Wholesaler $500 Retaile

Public Debt: Absolute and Relative Sizes of the Public Debt

Please help answer the following questions. 1) How do economists distinguish between the absolute and relative sizes of the public debt? Why is the distinction important? 2) How does an internally held public debt differ from an externally held public debt?

About demand and supply analysis

7. Using demand and supply analysis to assist you, what are the effects on the exchange rate between the British pound and the Japanese yen from: a decrease in Japanese interest rates a. The yen depreciates, and the pound appreciates b. The yen appreciates, and the pound depreciates c, The yen depreciates, and the pound

As a treasurer of a large U.S. corporation, you must decide

As a treasurer of a large U.S. corporation, you must decide how best to manage the firm's cash flows to maximize profits, subject to maintaining an acceptable level of risk. Imagine that you are at a firm which has an account payable to a French firm of ?2,000,000 due in 180 days. Review the options available for managing this f

Exchange Rate

The Republic of Republic produces two goods, marshmallows (MM) and soda water (SW). In 1994, the 100 units of MM produced sold for $3 per unit and the 50 units of SW produced sold for $1 per unit. In 1999, the 150 units of MM produced sold for $6 per unit, and the 75 units of SW produced sold for $2 per unit. Calculate Real GDP

Macro-Contractionary Monetary Policy

1.Using the given ISLM model below, complete the policy statement to explain what would happen to foreign reserves at the central bank (or the FED), when a contractionary monetary policy is instituted under a fixed exchange rate system. ***ISLM Model attached as file**** The Policy statement: 1.-------------------------

flexible vs fixed exchange rates

A.) What are the basic arguments in favor of fixed exchange rates? B.) What are the basic arguments in favor of flexible exchange rates? C.) What characteristics of either might cause a country to choose one over the other?

countries have flexible exchange rates and highly mobile capital

A.) What are the effects of one country pursuing expansionary fiscal policy and tight monetary policy? B.) What are the effects of the other country pursuing a tight fiscal policy and an expansionary monetary policy? C.) What would happen to the interest rates and exchange rate between the two countries?

DFI Location

DFI Location Decision. Decko Co. is a US firm with a Chinese subsidiary that produces cell phones in China and sells them in Japan. This subsidiary pays its wages and its rent in Chinese yuan, which is stable relative to the dollar. The cell phones sold to Japan are denominated in Japanese yen. Assume that Decko Co. expec

Macroeconomics

define each of the six indicators, and describe its current status. In addition, present a separate graph for each indicator illustrating the historic trend for each. Introduction - 1. Real GDP - 2. Unemployment Rate - 3. Inflation Rate- 4. Interest Rate - 5. Foreign Exchange Rate - 350 words (this s

Depreciation in US Dollars

Here are a few questions/concepts that I'd like help understanding. The explanations are just in 'words'- no graphs.