Calculate the dollar exchange rate, International Economics

Assume the United States exports 1000 computers at a price of $3000 each and imports 15 UK autos at a price of 10000 pounds each. Assume that the dollar/pound exchange rate is $2 per pound.

a. Calculate in dollar terms, the US export receipts, import payments and trade balance prior to a depreciation in the dollar's exchange rate.

b. Suppose the dollar's exchange value depreciates by 10%. Assuming that the price elasticity of demand for US exports equals 3.0 and the price elasticity of demand for US imports equals 2.0, does the dollar depreciation improve or worsen the US trade balance? Why?

c. Now assuming that the price elasticity of demand for US exports equals 0.3 and the price elasticity of demand for US imports equals 0.2. Does this change the outcome? Why?

 

Posted Date: 3/7/2013 2:35:50 AM | Location : United States







Related Discussions:- Calculate the dollar exchange rate, Assignment Help, Ask Question on Calculate the dollar exchange rate, Get Answer, Expert's Help, Calculate the dollar exchange rate Discussions

Write discussion on Calculate the dollar exchange rate
Your posts are moderated
Related Questions
Q. Using the II - XX framework, show using a figure that fiscal policies by themselves cannot bring the economy to both internal and external balances. Answer: Starting at poi

what is delay line in cro?

explain the newo clacical theory of international trede

Marketing Considering that customer relationship marketing places a progressive and developmental expectation on organisations consider a start point for such an activity and ho

Q. Explain how the German Bundesbank gained its low-inflation reputation. Answer: Essentially Germany's experience with hyperinflation in the 1920s and yet again aft

Visit to village panchayat for agriculture based project

describe the U.S role in the world economy

What are disadvantages the classical theory of international trade

Porter Competitive Forces Model:         Effectively dealing with the competitive forces that exist within its industry lead to a successful organization. The organization i