ANALYSIS. Trade & Balance of Payments. Suppose the Belgian government decreases a tariff on all the automobiles it imports from abroad.
|
|
- Austen Cummings
- 5 years ago
- Views:
Transcription
1 ANALYSIS Trade & Balance of Payments Suppose the Belgian government decreases a tariff on all the automobiles it imports from abroad. A) Will each of the following groups benefit from this action? Explain. i) Belgian consumers ii) Belgian automobile manufacturers. B) Would the reduction in tariffs move each of the following toward deficit or surplus? Explain. i) Current account balance ii) Capital account balance
2
3 UNit 5.3
4 Imports america and Exports syrup Cars tractors mexico tomatoes canada japan summary * For each of these transactions, there are different currencies! * Each country MUST be paid in their own currency! * The buyer ( importer ) must exchange their currency for that of the seller ( exporter )
5 Imports america Exports and syrup Cars tractors mexico tomatoes Peso U.S. Dollar Peso Yen canada japan U.S. Dollar Canadian Dollar Canadian Dollar Peso
6 the Exchange rate We examine the scenario price of one currency in terms of the other currency Britain imports the new Ford Fiesta. To purchase these goods, British firms/consumer must convert their pounds into u.s. dollars at the EXCHANGE RATE! (i.e. - the price of the U.S. Dollar in British Pounds) * If one pound is worth two dollars, the exchange rate is 1 to $2 0.5 * The price of a U.S. Dollar is $2 * The price of a British Pound is The Exchange Rate depends on which cu!ency you are converting!
7 currency depreciation what happens if the dollar price of a british pound increases? $2 to 1 $5 to 1 MORE units of dollars are needed to buy a single unit of the other currency! The U.S. Dollar has DEPRECIATED in value relative to the british pound! * The U.S. Dollar: less purchasing power * Has Weaker in the open global market * Is
8 currency Appreciation what happens if the dollar price of a british pound DEcreases? $2 to 1 $1 to 2 LESS units of dollars are needed to buy a single unit of the other currency! The U.S. Dollar has APPRECIATED in value relative to the british pound! * The U.S. Dollar: More purchasing power * Has Stronger in the open global market * Is
9 Let s investigate graphing the foreign exchange market
10 POUND PER DOLLAR ER SD 2 DD Q1 This is the QDollars foreign exchange market
11 POUND PER DOLLAR ER SD 2 DD Q1 QDollars it measures the exchange rate betw"n two currencies
12 POUND PER DOLLAR ER market for the U.S. Dollar SD 2 DD Q1 QDollars the exchange rate is established by the supply & demand for a cu!ency!
13 POUND PER DOLLAR ER market for the U.S. Dollar SD 4 DD Q2 QDollars as exchange rate (pounds per dollar), increases... the dollar APPRECIATES
14 POUND PER DOLLAR ER market for the U.S. Dollar SD 0.5 DD Q3 QDollars as exchange rate (pounds per dollar), decreases... the dollar DEPRECIATES
15 POUND PER DOLLAR ER market for the U.S. Dollar SD Dollar Appreciates Pound Depreciates 2 Dollar Depreciates Pound Appreciates DD Q1 QDollars foreign exchange market -- HOW IT WORKS --
16 and last but certainly not least... exchange rate determinants
17 currency shifters determinants of the foreign exchange market 1. Changes in taste (Example : European tourists flock to cruise in the United States) * Europeans will need to exchange their Euros for Dollars * Demand for U.S. Dollar increases * Europeans inject their Euros into the exchange market * Supply of Euros in the exchange market increases U.S. Dollar APPRECIATES Euro DEPRECIATES
18 currency shifters determinants of the foreign exchange market 2. Changes in income (due to imports) (Example : US income level increases and Americans buy more Japanese imports ) * Americans will need to exchange their Dollars for Yen * Demand for the Yen increases * Americans inject their Dollars into the exchange market * Supply of Dollars in the exchange market increases U.S. Dollar DEPRECIATES Yen APPRECIATES
19 currency shifters determinants of the foreign exchange market 3. Changes in prices (due to imports) (Example : US price level increases relative to India and Americans move to buy cheaper Indian imports) * Americans will need to exchange their Dollars for Rupees * Demand for the Rupees increases * Americans inject their Dollars into the exchange market * Supply of Dollars in the exchange market increases U.S. Dollar DEPRECIATES Rupee APPRECIATES
20 currency shifters determinants of the foreign exchange market 4. Changes in interest rate (Example : US interest rates grow higher than England) * Britons will need to exchange their Pounds for Dollars * Demand for U.S. Dollar increases * Britons inject their Pounds into the exchange market * Supply of Pounds in the exchange market increases U.S. Dollar APPRECIATES Pound DEPRECIATES
21 let s practice!
22 SCENARIO British interest rates reach the highest level in the open global economy market for the * International investors will need to exchange their currency for Pounds * Demand for the British Pound increases IR U.K. Pound ER SP R2 R1 DP2 1 * The value IR of2the British Pound DP Q1 Q2 APPRECIATES Q1 Qp
23 SCENARIO Due to an economic boom, the national income level in the US rises market for the * American consumers will demand more imported goods U.S. dollar ER SD * Americans will need to exchange their dollars for foreign currency * Supply forirthe American Dollar 1 increases IR R1 R2 DD 2 * The value of the American Dollar DEPRECIATES Q1 SD2 Q1 Q2 QD
24 SCENARIO Due to outbound capital flow, prices in the American economy fall market for the * International consumers will demand more American exports * Foreigners will need to exchange their currency for U.S. Dollars * Demand for American Dollar IRthe 1 U.S. dollar ER SD R2 R1 DD2 increases IR DD 2 * The value of the American Dollar APPRECIATES Q1 Q1 Q2 QD
25 SCENARIO The summer season sees a huge increase in tourism to Europe market for the * International travelers will need to exchange their currency for Euros * Demand for the Euro ER SE R2 R1 increases IR EURO DE2 1 * The value IR of2the Euro DE Q1 Q2 APPRECIATES Q1 QE
Unit 5: International Trade
Unit 5: International Trade 1 International Trade 2 Where does your stuff come from? (Check the tags on your clothes, shoes, watch, calculator, etc.) Why have your clothes and personal items traveled all
More information2. Interest rates in the United States rise faster than interest rates in Canada.
Exchange Rates Interaction Between Currencies When Americans buy more foreign goods, U.S. dollars are sold in the international currency market to purchase foreign currencies that are used to pay producers
More informationUnit 5: International Trade
Unit 5: International Trade 1 International Trade Why do people trade? 2 Magic of Markets Brown Bag Activity 3 Why do people trade? 1. Assume people didn t trade. What things would you have to go without?
More informationUse the following to answer questions 19-20: Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50.
Name: Date: 1. Open-economy macroeconomics is the branch of economics that deals with: A) reducing regulations on business. B) the relationships between economies of different nations. C) reducing employment
More informationThe Foreign Exchange Market
The Foreign Exchange Market Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The market in which foreign currencies are traded is known as the: A. stock
More informationAssignment 13 (Chapter 14)
Assignment 13 (Chapter 14) 1. According to the absorption approach, the economic circumstances that best warrant a currency devaluation is where the domestic economy faces: a) Unemployment coupled with
More informationOpen-Economy Macroeconomics: Basic Concepts
Lesson 10 Open-Economy Macroeconomics: Basic Concepts Henan University of Technology Sino-British College Transfer Abroad Undergraduate Programme 0 In this lesson, look for the answers to these questions:
More informationStudy Questions. Lecture 15 International Macroeconomics
Study Questions Page 1 of 5 Study Questions Lecture 15 International Macroeconomics Part 1: Multiple Choice Select the best answer of those given. 1. If the aggregate supply and demand curves in the figure
More informationPractice Problems 41-44
Practice Problems 41-44 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. If a country sold more goods and services to the rest of the world than they purchased
More informationClosed vs. Open Economies
Closed vs. Open Economies! A closed economy does not interact with other economies in the world.! An open economy interacts freely with other economies around the world. 1 Percent of GDP The U.S. Economy
More informationChapter 31 Open Economy Macroeconomics Basic Concepts
Chapter 31 Open Economy Macroeconomics Basic Concepts 0 In this chapter, look for the answers to these questions: How are international flows of goods and assets related? What s the difference between
More informationOpen Economy. Sherif Khalifa. Sherif Khalifa () Open Economy 1 / 66
Sherif Khalifa Sherif Khalifa () Open Economy 1 / 66 International Flows Definition A closed economy is an economy that does not interact with other economies. Definition An open economy is an economy
More informationChapter 25 The Exchange Rate and the Balance of Payments The Foreign Exchange Market
Chapter 25 The Exchange Rate and the Balance of Payments 25.1 The Foreign Exchange Market 1) Foreign currency is A) the market for foreign exchange. B) the price at which one currency exchanges for another
More informationAP Macro Unit 3: Int'l Trade and Finance
Name: Class: Date: AP Macro Unit 3: Int'l Trade and Finance Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. The overall U.S. balance of payments
More informationMacroeonomics. 18 this chapter, Open-Economy Macroeconomics: look for the answers to these questions: Introduction. N.
C H A P T E R In 18 this chapter, look for the answers to these questions: Open-Economy Macroeconomics: How are international flows of goods and assets Basic Concepts related? P R I N C I P L E S O F Macroeonomics
More informationOpen-Economy Macroeconomics: Basic Concepts
Wojciech Gerson (1831-1901) Seventh Edition Principles of Macroeconomics N. Gregory Mankiw CHAPTER 18 Open-Economy Macroeconomics: Basic Concepts Closed vs. Open Economies A closed economy does not interact
More informationOpen Economy. Sherif Khalifa. Sherif Khalifa () Open Economy 1 / 70
Sherif Khalifa Sherif Khalifa () Open Economy 1 / 70 Definition A closed economy is an economy that does not interact with other economies. Definition An open economy is an economy that interacts freely
More informationEconomics. Open-Economy Macroeconomics: Basic Concepts CHAPTER. N. Gregory Mankiw. Principles of. Seventh Edition. Wojciech Gerson ( )
Seventh Edition Principles of Economics N. Gregory Mankiw Wojciech Gerson (1831-1901) CHAPTER 31 Open-Economy Macroeconomics: Basic Concepts In this chapter, look for the answers to these questions How
More informationANALYSIS. current and capital accounts
ANALYSIS current and capital accounts trade deficit or trade surplus amount: 1. Japan buys $100 billion in American construction equipment 2. America pays $5 billion in interest on T-Bonds to Spain 3.
More informationStudy Questions (with Answers) Lecture 15 International Macroeconomics
Study Questions (with Answers) Page 1 of 5 Study Questions (with Answers) Lecture 15 International Macroeconomics Part 1: Multiple Choice Select the best answer of those given. 1. If the aggregate supply
More informationHow the Foreign Exchange Market Works
OpenStax-CNX module: m48784 1 How the Foreign Exchange Market Works OpenStax College This work is produced by OpenStax-CNX and licensed under the Creative Commons Attribution License 4.0 By the end of
More informationStudy Questions (with Answers) Lecture 15 International Macroeconomics
Study Questions (with Answers) Page 1 of 5 Study Questions (with Answers) Lecture 15 International Macroeconomics Part 1: Multiple Choice Select the best answer of those given. 1. If the aggregate supply
More informationProblem Set 13. Name: Class: Date: Multiple Choice Identify the letter of the choice that best completes the statement or answers the question.
Name: Class: Date: Problem Set 13 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. International trade a. raises the standard of living in
More informationUnit 4 Study Guide: Macroeconomics & International Economics
Name: Unit 4 Study Guide: Macroeconomics & International Economics Standards: SSEMA2 Explain the role and functions of the Federal Reserve System. b. Describe the organization of the Federal Reserve System
More informationOpen-Economy Macroeconomics: Basic Concepts
N. Gregory Mankiw Principles of Macroeconomics Sixth Edition 18 Open-Economy Macroeconomics: Basic Concepts Premium PowerPoint Slides by Ron Cronovich 2012 UPDATE In this chapter, look for the answers
More informationEconS 327 Test 2 Spring 2010
1. Credit (+) items in the balance of payments correspond to anything that: a. Involves payments to foreigners b. Decreases the domestic money supply c. Involves receipts from foreigners d. Reduces international
More informationExam 2 Sample Questions FINAN430 International Finance McBrayer Spring 2018
Sample Multiple Choice Questions 1. Suppose you observe a spot exchange rate of $1.0500/. If interest rates are 5% APR in the U.S. and 3% APR in the euro zone, what is the no-arbitrage 1-year forward rate?
More informationStudy Questions. Lecture 13. Exchange Rates
Study Questions Page 1 of 5 Study Questions Lecture 13 Part 1: Multiple Choice Select the best answer of those given. 1. The statement the yen rose today from 121 to 117 makes sense because a. The U.S.
More informationThe Foreign Exchange Market
INTRO Go to page: Go to chapter Bookmarks Printed Page 421 The Foreign Exchange Module 43: Exchange Policy 43.1 Exchange Policy Module 44: Exchange s and 44.1 Exchange s and The role of the foreign exchange
More informationDemand and Supply Shifts in Foreign Exchange Markets *
OpenStax-CNX module: m57355 1 Demand and Supply Shifts in Foreign Exchange Markets * OpenStax This work is produced by OpenStax-CNX and licensed under the Creative Commons Attribution License 4.0 By the
More informationStudy Questions (with Answers) Lecture 13. Exchange Rates
Study Questions (with Answers) Page 1 of 5 Part 1: Multiple Choice Select the best answer of those given. Study Questions (with Answers) Lecture 13 1. The statement the yen rose today from 121 to 117 makes
More informationRutgers University Spring Econ 336 International Balance of Payments Professor Roberto Chang. Problem Set 1. Name:
Rutgers University Spring 2013 Econ 336 International Balance of Payments Professor Roberto Chang Problem Set 1 Name: 1. When the exchange value of the euro rises in terms of the U.S. dollar, U.S. residents
More informationAlan Bush. October 1, 2018 STOCK INDEX FUTURES
Alan Bush Financial Forecast October 1, 2018 STOCK INDEX FUTURES U.S. stock index futures are sharply higher after the U.S. and Canada reached a last minute deal to revise the North American Free Trade
More informationI. A. B. C. D. E. F I. A. B. C. I. A B. C.
AP EXAM FRQS I. Assume that the United States economy is in long-run equilibrium with an expected inflation rate of 6 percent and an unemployment rate of 5 percent. The nominal interest rate is 8 percent.
More informationExchange Rates. Exchange Rates. ECO 3704 International Macroeconomics. Chapter Exchange Rates
Exchange Rates CHAPTER 13 1 Exchange Rates What are they? How does one describe their movements? 2 Exchange Rates The nominal exchange rate is the price of one currency in terms of another. The spot rate
More informationInternational Economics
International Economics Unit 5 Pretest As we learn about International Economics, let s see what you already know. Remember do the best you can, but don t stress this assessment doesn t count toward your
More informationMacroeconomics. Open-Economy Macroeconomics: Basic Concepts. Introduction. In this chapter, look for the answers to these questions: N.
C H A P T E R 18 Open-Economy Macroeconomics: Basic Concepts P R I N C I P L E S O F Macroeconomics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2010 South-Western, a part of Cengage Learning,
More informationRutgers University Spring Econ 336 International Balance of Payments Professor Roberto Chang. Problem Set 2. Deadline: March 1st.
Rutgers University Spring 2012 Econ 336 International Balance of Payments Professor Roberto Chang Problem Set 2. Deadline: March 1st Name: 1. The law of one price works under some assumptions. Which of
More informationCHAPTER 2 THE DOMESTIC AND INTERNATIONAL FINANCIAL MARKETPLACE
CHAPTER 2 THE DOMESTIC AND INTERNATIONAL FINANCIAL MARKETPLACE ANSWERS TO QUESTIONS: 1. The saving-investment cycle consists of net savers (surplus spending units) transferring funds to net investors (deficit
More informationProfessor Christina Romer. LECTURE 25 EXCHANGE RATES AND THE BALANCE OF PAYMENTS April 24, 2018
Economics 2 Spring 2018 Professor Christina Romer Professor David Romer LECTURE 25 EXCHANGE RATES AND THE BALANCE OF PAYMENTS April 24, 2018 I. OVERVIEW OF INTERNATIONAL MACROECONOMICS A. Building blocks
More information29 Exchange Rates and International Capital Flows
29 Exchange Rates and International Capital Flows Figure 29.1 Trade Around the World Is a trade deficit between the United States and the European Union good or bad for the U.S. economy? (Credit: modification
More informationNet Exports and Capital Flows: Linking Financial and Goods Markets
ACTIVITY 7-5 Net Exports and Capital Flows: Linking Financial and Goods Markets The term capital flow refers to the movement of financial capital (money) between economies. Capital inflows consist of foreign
More informationMacroeconomics Unit 1: Basic Economics Concepts
Macroeconomics Unit 1: Basic Economics Concepts Key Terms- Define the following: 3 Economic Systems 1. Scarcity 1. Centrally Planned Economies Individuals, businesses, and governments have Economic system
More information18 INTERNATIONAL FINANCE* Chapter. Key Concepts
Chapter 18 INTERNATIONAL FINANCE* Key Concepts Financing International Trade The balance of payments accounts measure international transactions. Current account records exports, imports, net interest,
More informationInternational Economics questions Part II
International Economics questions Part II A country would justify erecting trade barriers, such as tariffs or quotas, to a. make goods cheaper b. expand their markets c. protect domestic jobs d. stimulate
More informationJeopardy. Trade Currency Int l Bus. Barriers. World Business Q$100 Q$100 Q$100 Q$100 Q$100 Q$200 Q$200 Q$200 Q$200 Q$200 Q$300 Q$300 Q$300 Q$300 Q$300
Jeopardy Trade Currency Int l Bus. Barriers World Business Q$100 Q$100 Q$100 Q$100 Q$100 Q$200 Q$200 Q$200 Q$200 Q$200 Q$300 Q$300 Q$300 Q$300 Q$300 Q$400 Q$400 Q$400 Q$400 Q$400 Q$500 Q$500 Q$500 Q$500
More information1. Anna and Barry can grow the following amounts of potatoes and cabbage with the same amount of labor :
KOFA HIGH CHOOL OCIAL CIENCE EPARTMENT AP ECONOMIC EXAM PREP WORKHOP # 6 > GLOBAL TRAE NAME : ATE : Comparative Advantage : For questions one and two below, decide whether a problem is an output or input
More information1. Do parts f and g after unit 3. Assume that the country of Fischerland produces only consumer goods and capital goods.
FRQ Packet These are all (or almost all) of the FRQ that the College Board has given in the past 10 years broken down by unit. The key to my previous AP students success has been the key to anyone s success
More informationExchange rate: the price of one currency in terms of another. We will be using the notation E t = euro
Econ 330: Money and Banking Fall 2014, Handout 8 Chapter 17 : Foreign Exchange Market 1. Foreign Exchange Market Exchange rate: the price of one currency in terms of another. We will be using the notation
More informationStudy Questions. Lecture 13. Exchange Rates
Study Questions Page 1 of 5 Part 1: Multiple Choice Select the best answer of those given. Study Questions Lecture 13 1. The statement the yen rose today from 121 to 117 makes sense because a. The U.S.
More informationStudy Questions (with Answers) Lecture 13. Exchange Rates
Study Questions (with Answers) Page 1 of 5 Part 1: Multiple Choice Select the best answer of those given. Study Questions (with Answers) Lecture 13 1. The statement the yen rose today from 121 to 117 makes
More informationECONOMIC OUTLOOK FINALLY, SYNCHRONIZED GLOBAL GROWTH
ECONOMIC OUTLOOK FINALLY, SYNCHRONIZED GLOBAL GROWTH Augustine Faucher Chief Economist November 13, 2017 Senior Economic Advisor Chief Economist BETTER GROWTH THIS YEAR, AND AN UPGRADE TO 2018 World output,
More informationIntroduction to Exchange Rates and the Foreign Exchange Market
Introduction to Exchange Rates and the Foreign Exchange Market 2 1. Refer to the exchange rates given in the following table. Today One Year Ago June 25, 2010 June 25, 2009 Country Per $ Per Per Per $
More informationTREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS
TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS April June 2013 During the second quarter, the U.S. dollar s nominal trade-weighted exchange value increased 1.7 percent as measured by the Federal
More informationFull file at CHAPTER 2 THE DOMESTIC AND INTERNATIONAL FINANCIAL MARKETPLACE
CHAPTER 2 THE DOMESTIC AND INTERNATIONAL FINANCIAL MARKETPLACE ANSWERS TO QUESTIONS: 1. The saving-investment cycle consists of net savers (surplus spending units) transferring funds to net investors (deficit
More informationCHAPTER 2 THE DOMESTIC AND INTERNATIONAL FINANCIAL MARKETPLACE
CHAPTER 2 THE DOMESTIC AND INTERNATIONAL FINANCIAL MARKETPLACE ANSWERS TO QUESTIONS: 1. a. A multinational corporation is a firm that has investments in manufacturing and/or distribution facilities in
More informationPrinciples of Macroeconomics Module 7.1. Understanding Balance of Payments
Principles of Macroeconomics Module 7.1 Understanding Balance of Payments 276 Balance of Payments Balance of Payments are the measurement of economic activity a country conducts internationally Current
More informationInternational Trade. Balance of Payments
International Trade Balance of Payments Trade statistics As economists we need an overall view of our money transactions with the rest of the world. The government system for analysing this is the Balance
More informationTOBB-ETU, Iktisat Bölümü Macroeconomics II (IKT 234) Part III (Open Economy, Long-Run) Çal şma Sorular -Cevaplar (Ozan Eksi)
TOBB-ETU, Iktisat Bölümü Macroeconomics II (IKT 234) Part III (Open Economy, Long-Run) Çal şma Sorular -Cevaplar (Ozan Eksi) 1 INTRODUCTORY DEFINITIONS 1-) An economy that interacts with other economies
More informationTOPIC 9. International Economics
TOPIC 9 International Economics 2 Goals of Topic 9 What is the exchange rate? NX back!! What is the link between the exchange rate and net exports? What is the trade deficit? How do different shocks affect
More informationTREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS
TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS October During the fourth quarter, the U.S. dollar s nominal trade-weighted exchange value appreciated 5 percent, as measured by the Federal Reserve
More informationOPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS
17 OPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS LEARNING OBJECTIVES: By the end of this chapter, students should understand: how net exports measure the international flow of goods and services. how net
More informationAssignment 6. Deadline: July 29, 2005
ECON 1010C Principles of Macroeconomics Instructor: Sharif F. Khan Department of Economics Atkinson College York University Summer 2005 Assignment 6 Deadline: July 29, 2005 Part A Multiple-Choice Questions
More informationM01/330/S(1) ECONOMICS STANDARD LEVEL PAPER 1. Wednesday 9 May 2001 (afternoon) 1 hour INSTRUCTIONS TO CANDIDATES
INTERNATIONAL BACCALAUREATE BACCALAURÉAT INTERNATIONAL BACHILLERATO INTERNACIONAL M01/330/S(1) ECONOMICS STANDARD LEVEL PAPER 1 Wednesday 9 May 2001 (afternoon) 1 hour INSTRUCTIONS TO CANDIDATES! Do not
More informationExchange rates and aviation: examining the links
-50%+ -48% to -50% -44% to -46% -40% to -42% -36% to -38% -32% to -34% -28% to -30% -24% to -26% -20% to -22% -16% to -18% -12% to -14% -8% to -10% -4% to -6% 0% to -2% 0% to 2% 4% to 6% 8% to 10% 12%
More informationInternational Finance
International Finance Chapter 21 CHAPTER CHECKLIST 1. Describe a country s balance of payments accounts and explain what determines the amount of international borrowing and lending. 2. Explain how the
More informationThose who are interested in international business may wish to take FIN 430 which is our course on international financial management.
1 For the most part, the basic principles you ll learn in this class apply to both domestic and international businesses. However, two important differences you ll find when doing business internationally
More informationOPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS
18 OPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS LEARNING OBJECTIVES: By the end of this chapter, students should understand: how net exports measure the international flow of goods and services. how net
More informationA PRIMER ON EXCHANGE RATES AND EXPORTING EM041E
A PRIMER ON EXCHANGE RATES AND EXPORTING By Andrew J. Cassey, Washington State University School of Economic Sciences. Pavan Dhanireddy, Washington State University School of Economic Sciences EM041E EM041E
More information2. What are the equilibrium prices in foreign exchange markets? 4. What important role does an exchange rate play in a nation s economy/
International Trade and Economic Growth Chapters 6, 17, and 38 Chapter 6: The United States in the Global Economy 1. Explain the effect of trade restrictions. 2. List the factors that influence equilibrium
More informationChapter 6. Government Influence on Exchange Rates. Lecture Outline
Chapter 6 Government Influence on Exchange Rates Lecture Outline Exchange Rate Systems Fixed Exchange Rate System Freely Floating Exchange Rate System Managed Float Exchange Rate System Pegged Exchange
More informationa) Answer parts (i)-(iii) assuming the following exchange rates hold: Exchange Rate (as US$ per foreign currency)
Econ 455 Lapan Spring 2001 FINAL EXAM Answer a total of three questions. Answer at most one question from Part II. {answer three questions from Part I or answer 2 questions from Part I and one question
More informationBRITISH COLUMBIA NOTES PROVINCIAL PROFILE. Simon Richards
PROVINCIAL PROFILE British Columbia s Economy in 2013 Gross domestic product (GDP): $229.7 billion GDP per capita: $50,100 Population: 4.6 million Merchandise exports and imports: 37.5% of GDP British
More informationMacroeconomics LESSON 4 ACTIVITY 54
Macroeconomics LEON 4 ACTIVITY 54 How Monetary and Fiscal Policies Affect Exchange Rates Changes in a nation s monetary and fiscal policies affect its exchange rates and its balance of trade through the
More informationStudy Questions. Lecture 14 Pegging the Exchange Rate
Study Questions Page 1 of 7 Study Questions Lecture 14 the Exchange Rate Part 1: Multiple Choice Select the best answer of those given. 1. Suppose the central bank of Mexico is pegging its currency, the
More informationBRITISH COLUMBIA NOTES BRITISH COLUMBIA S PROFILE. Simon Richards
BRITISH COLUMBIA S PROFILE Economic Indicators in 2015 Gross domestic product (GDP): $250.0 billion GDP per capita: $53,300 Population: 4.7 million International merchandise exports and imports: 38.7%
More informationChapter 2 Foreign Exchange Parity Relations
Chapter 2 Foreign Exchange Parity Relations Note: In the sixth edition of Global Investments, the exchange rate quotation symbols differ from previous editions. We adopted the convention that the first
More information29 TRADE WITH MONEY OVERVIEW
29 TRADE WITH MONEY OVERVIEW 1. The foreign exchange rate is the number of dollars it takes to buy a foreign currency. The exchange rate will be one factor in determining the price of foreign goods in
More informationEXCHANGE RATE FORECASTS
April 2014 EXCHANGE RATE FORECASTS MODEST ROOM FOR A STRONGER U.S. DOLLAR IN 2014-2015 AFTER 2013 S LARGE GAINS U.S. Dollar: The dollar index has inched higher in 2014 as the dollar strengthened against
More informationA Macroeconomic Theory of the Open Economy
A Macroeconomic Theory of the Open Economy PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 Market for Loanable Funds In an open economy S = I + NCO Saving = Domestic investment
More informationLecture #2: Notes on Balance of Payments and Exchange Rates
Christiano 362, Winter, 2003 January 10 Lecture #2: Notes on Balance of Payments and Exchange Rates 1. Balance of Payments. Last time, we talked about the current account, CA, and how it can be expressed
More informationChapter 2 The Domestic and International Financial Marketplace
Download Solution Manual for Contemporary Financial Management 13th Edition by Moyer Link full: https://testbankservice.com/download/solutionmanual-for-contemporary-financial-management-13th-editionby-moyer/
More information3. If the price of a British pound increases from $1.50 per pound to $1.80 per pound, we say that:
HOMEWORK 7 (ON CHAPTERS 14 AND 15) ECO41 FALL 2015 UDAYAN ROY Each correct answer is worth 1 point. The maximum score is 20 points. This homework is due in class on Wednesday, December 2. Please show your
More informationSignificance of a Competitive Exchange Rate
Significance of a Competitive Exchange Rate What is the issue? Major economies like China are using the instrument of competitive exchange rates for a stabilized economy, which India can also follow. What
More informationOperating Exposure. Operating & Financing Cash Flows. Expected Versus Unexpected Changes in Cash Flows. Operating & Financing Cash Flows
Chapter 9 Prepared by Shafiq Jadallah To Accompany Fundamentals of Multinational Finance Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman Copyright 2003 Pearson Education, Inc. Slide 9-1 Chapter
More informationIn this Session, you will explore international financial markets. You will also: Learn about the international bond, international equity, and
1 In this Session, you will explore international financial markets. You will also: Learn about the international bond, international equity, and Eurocurrency markets. Understand the primary functions
More informationPower of Travel Promotion Evolution
Power of Travel Promotion Evolution Promotion More Important than Ever Power of Promotion $7 million Median state = marketing budget FY 2014-15 OR 45 seconds worth of Super Bowl ads $100 million = Presidential
More informationThe Global Marketplace. International Trade
The Global Marketplace International Trade Exports are goods and services that one country sells to another country. Imports are goods and services that one country buys from another country. Trade in
More informationThe Global Economy Part I
The Global Economy Part I We have global markets which make us extremely interdependent so that what goes on in individual countries is of consequence to us all. -George Soros International Trade The flow
More information2. (Figure: Change in the Demand for U.S. Dollars) Refer to the information
Name: Date: Use the following to answer questions 1-3: Figure: Change in the Demand for U.S. Dollars 1. (Figure: Change in the Demand for U.S. Dollars) Refer to the information in the figure. The change
More informationChapter 2. International Flow of Funds. Lecture Outline. Balance of Payments Current Account Capital and Financial Accounts
Chapter 2 International Flow of Funds Lecture Outline Balance of Payments Current Account Capital and Financial Accounts International Trade Flows Distribution of U.S. Exports and Imports U.S. Balance
More informationProfessor Christina Romer. LECTURE 25 EXCHANGE RATES AND THE BALANCE OF PAYMENTS April 24, 2018
Economics 2 Spring 2018 Professor Christina Romer Professor David Romer LECTURE 25 EXCHANGE RATES AND THE BALANCE OF PAYMENTS April 24, 2018 I. OVERVIEW OF INTERNATIONAL MACROECONOMICS A. Building blocks
More informationEXTERNAL STABILITY & THE EXCHANGE RATE
EXTERNAL STABILITY & THE EXCHANGE RATE Peter Kennedy Head Teacher Teaching & Learning CHHS HSC Senior Marker Economics Tutor Macquarie University 1 Australia s External Stability Let s start with some
More informationInternational Corporate Finance
International Corporate Finance Solution Manual Chapter 2: International Flow of Funds Effects of Tariffs Assume a simple world in which the U.S. exports soft drinks and beer to France and imports wine
More informationLECTURE XIII. 30 July Monday, July 30, 12
LECTURE XIII 30 July 2012 TOPIC 15 Exchange Rates BIG PICTURE How do we evaluate currency across countries? How is the exchange rate determined? What is the relationship of the foreign exchange market
More informationChapter 5. Saving and Investment in the Open Economy. Copyright 2009 Pearson Education Canada
Chapter 5 Saving and Investment in the Open Economy Copyright 2009 Pearson Education Canada Balance of Payments Accounting The balance of payments accounts are the record of country s international transactions.
More informationHOMEWORK 8 (BALANCE OF PAYMENTS ACCOUNTING) ECO41 FALL 2013 UDAYAN ROY
HOMEWORK 8 (BALANCE OF PAYMENTS ACCOUNTING) ECO41 FALL 2013 UDAYAN ROY These questions are based on Chapter 13 of International Economics by Krugman, Obstfeld, and Melitz, Ninth Edition. Unless otherwise
More informationForeign exchange rates and trade
Topic 10 Foreign exchange rates and trade Learning outcomes After studying this topic, you will be able to: define foreign exchange; and describe the impact of exchange rates on countries, society and
More informationINTERNATIONAL FINANCE TOPIC
INTERNATIONAL FINANCE 11 TOPIC The Foreign Exchange Market The dollar ($), the euro ( ), and the yen ( ) are three of the world s monies and most international payments are made using one of them. But
More informationChapter 17: Macroeconomics in an Open Economy
Chapter 17: Macroeconomics in an Open Economy Yulei Luo SEF of HKU April 16, 2012 Learning Objectives 1. Explain how the balance of payments is calculated. 2. Explain how exchange rates are determined
More information