Consider the foreign exchange market for dollars as discussed in Chapter 14, section 3.2 of your text and depicted above. How would the news headlines below affect the market for foreign exchange? Highlight or change the color of your response. 1. Headline: Fed raises interest rates; attracts foreign investors. Supply of dollars (increase / decrease / stay the same) Demand for dollars (increase / decrease / stay the same) Euros per Dollar (increase / decrease / stay the same) Quantity of Dollars (increase / decrease / stay the same)
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- 4. What factors will shift the supply and demand for currency?The following graph depicts the supply schedule for euros. Hint: You can drag the black point (cross symbol) to various positions on the graph to see the values of the coordinates on the graph. You will not be graded for any changes you make to the graph. VALUE OF EURO (U.S. dollars per euro) 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 0 50 100 150 200 250 300 350 400 450 500 550 600 QUANTITY OF EUROS (Billions) At an exchange rate of 1.2 per euro, the quantity of euros supplied is of euros supplied is + ? billion euros, while at an exchange rate of 1.8 per euro, the quantity billion euros. This confirms that the supply schedule for euros is sloping.Refer to the following list, and explain who will be buying Canadian dollars and who will be selling. a) a Canadian businesswoman visiting Japan The Canadian businesswoman will be selling vCanadian dollars to buy Japanese yen b) a Russian tourist visiting Cape Breton The Russian tourist will be (Click to select) v dollars to spend in Cape Breton. c) an American corporation building a new plant in Saskatoon The American corporation will be (Click to select) v Canadian dollars in order to purchase the building in Saskatoon. d) a Canadian bank expanding its operations in the United States The Canadian bank will be (Click to select) v Canadian dollars to buy American dollars to expand its operations in the U.S. (Click to select) selling buying
- Thomas , a currency trader in East African Community, has ksh 400,000. He wishes to assess if triangular arbitrage by moving to Uganda, and Tanzania. The exchange rate quotes from the currency convertor was: 32TZ/1 KES 20UGH/IKES Agreed exchange rate between Uganda shillings and Tanzania shilling was 1.5 UGH /1TZ Compute the cross exchange rate and triangular arbitrage profit. Explain your answer.Which of the following would increase the U.S. demand for foreign currency? a. an increase in U.S. real interest rate b. an increase in incomes abroad c. a decrease in the U.S. demand for foreign goods d. an increase in the U.S. demand for foreign goods e. a decrease in U.S. income O Icon Key Ox 0 F8 F9 prt sc F10Answer the question according to the graph below. Dollar/euro exchange rate, Ese Ese Dollar return Dollar return 2' Expected euro return Ee Expected euro return 3' 1' Esie Rates of return (in dollar terms) R R L(Rg. Yus) L(Rg. Yus) Mus Pus "us Pis 4 U.S. real money supply 1 Mus Pis Mus Pis US US U.S. real money holdings U.S. real money holdings Assume that the U.S. money supply is initially given at M'us, the price level is initially given at P'us, and the equilibrium exchange rate is initially at E's/e. US, US A permanent increase in the nominal money supply from Mus to M²us in the short-run will result in a new equilibrium at point Lütfen birini seçin: O A. 3' O B. 1' O C. 2' O D. 4'
- what is the cause of cryprto currencies downfall in the last two years?Answer the question according to the graph below. Dollar/euro exchange rate, Ese Esie Dollar return Dollar return 2' 2' Ee Expected euro return Ee 4' Expected euro return 3' 1" Ege Rates of return (in dollar terms) R R L(A Yus) L(Ag. Yus) Mis Pis Mis Pis 4 U.S. real US money supply Mus Pus MUs Pus U.S. real U.S. real money holdings money holdings Assume that the U.S. money supply is initially given at M-us, the price level is initially given at P'us, the equilibrium exchange rate is initially at E'sje. US, A temporary increase in the nominal money supply from M'us to M²us in the short-run will result in a new equilibrium at point US US Lütfen birini seçin: O A. 3' O B. 2' O C.1' O D. 4'WHAT IS ASIAN DOLLAR MARKET?
- Currently, it takes two Belize dollars to buy a U.S. dollar. If that number were to rise to three, then the Belize currency would have (appreciated, depreciated) and it would be (more, less) expensive for American tourists to vacation in Belize. Select one: a. depreciated; less. O b. depreciated; more O c. appreciated; less. O d. appreciated; more. Next page page to searchIf the government wants to O decrease; contractionary O increase; expansionary O increase; only rules-based O decrease: expansionary the value of its currency in the foreign exchange market, it can use monetary policy.Give typing answer with explanation and conclusion Consider country A, which uses a fixed exchange rate system pegging its currency value against the US dollars and has perfect capital mobility. In the short run, if the U.S. central bank, the Federal Reserve Board of the U.S., lowers the money supply of the U.S., then Select one: a. The Reserve Bank of Country A would have to lower its money supply. b. The Reserve Bank of Country A would have to raise its money?