Calculate the dollar exchange rate, International Economics

Assignment Help:

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?

 


Related Discussions:- Calculate the dollar exchange rate

Explain critical appraisal of chamberlins theory, Q. Explain Critical Appra...

Q. Explain Critical Appraisal of Chamberlins theory? a. Chamberlin assumed that monopolist competitors act independently and their price manicuring goes unnoticed by the rival

Discuss main factors affecting position of the dd schedule, Q. Disc...

Q. Discuss the main factors affecting the position of the DD schedule. Answer: The level of government taxes, demand, and investment and the domestic and foreign price

What do you mean by public expenditure, Q. What do you mean by Public Expen...

Q. What do you mean by Public Expenditure? The central governments have the responsibility of implementing various developmental programmes and bring about economic and social

Benefits enjoyed by indian companies, "1. Describe the important benefits e...

"1. Describe the important benefits enjoyed by Indian companies through TRIPs. Elaborate the main objectives of WTO in global economy. 2. "Leontiff paradox is proved in the Indian

What are the benefits and costs of a monetary union, The first African Econ...

The first African Economists Congress organized by the African Union concentrated on the creation of a monetary union and the introduction of single currency in Africa. (a) Ref

Explain why relative ppp is useful, Q. Explain why Relative PPP is useful w...

Q. Explain why Relative PPP is useful when comparing countries that base their price levels on different product baskets. Answer: For instance If the U.S price level increase

Double factors terms of trade, Calculate the doublefactoral terms of trade ...

Calculate the doublefactoral terms of trade (TD), formulated by Jacob Viner based on following information: Suppose in the base year of 2015, Px= 100, Pm= 100, Zx= 100, Zm= 100and

Product market shocks without exchange rate change, Q. Explain why the Euro...

Q. Explain why the European Union's current combination of rapid capital migration with limited labor migration may actually raise the cost of adjusting to product market shocks wi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd