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1. Suppose that a country's real growth is 2% a year, while its real deficit is rising 5% per year. Can the country continue to afford such deficit indefinitely? What problems might it face in the future?
2.The Fed wants to increase the money supply (which is currently 4000) by 200. The money multiplier is 3. For each 1 percentage point the discount rate falls, banks borrow an additional 20. Explain how the Fed can achieve its goals using the following tools: (in actual numbers)a. Change the reserve requirementb. Change the discount ratec. Us Open market operations
3. One type of toy bears is in China and exported to the US. A toy bear sells for 16 Yen in China. The exchange rate of Chinese yen and US dollars is $1 = 8 Yen.
a. what will be the price of this toy bear in US dollars?b. Suppose the US demand for this toy bear is D = 100- 10*P. P is the price in US dollar, what is the quantity of US demand for this toy bear?c. If the Chinese yen is depreciated by 20%. This means Chinese yen is worth 80% of its previous value compared to US dollar. What will be the US quantity of demand for this toy bear?
d. What conclusion you can make on the impact of exchange rate on exports?
Suppose that a nation faces a balance of payments deficit with high unemployment. Determine what exchange-rate adjustment can be made to solve these problems?
Doug Wyatt is a currency trader for Global Currency Exchange Corporation Wyatt has compiled the following data concerning the U.S. dollar or Australian dollar exchange rate.
May rise or reduce in absolute value as one moves southeast along an indifference curve, depending upon whether the substitution or income effect is dominant.
Assume that the Bank of Canada decides to expand money supply. Explain why would it be counter productive for the Bank of Canada to fix the value of the exchange rate?
Suppose two open economies A and B. In this economy only one good is manufactured for time t = 0 and price P(0,A)=1 Dollar and P(0,B) = 1,5 Euro.
Assume that both the stock market and housing prices fall in the United State 1st, describe the channels through which these shocks affect aggregate demand for goods and services.
Using demand and supply analysis, answer the questions. Determine the effects on the exchange rate between the British pound and the Japanese yen from:
Assume foreign income rise to 108,000 and interest rate is allowed to temporarily diverge from world economy interest costs. What are the equations for IS and LM curves?
The firm produces a global positioning system that sells for $1,000 with costs of goods sold of 48 percent of sales. Compared to the US, China offers a 6 percent cost reduction
The table given below shows the values of two goods. Assume wheat is produced in the United State and coffee beans are produced in Kenya.
Discuss each of the six indicators, and explain its current status. In addition, present a separate graph for each indicator illustrating the historic trend for each.
From the following data, calculate the average annual return, the variance, standard deviation,and coefficient of variation for each asset.
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