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 the money markets of two countries, Q. Explain the followin...

Q. Explain the following figure: Answer : The figure explicate how the money markets of two countries are linked through the foreign exchange market. The financial pol

Global crisis, Chose a problematic situation that is related to your workpl...

Chose a problematic situation that is related to your workplace and use the following approach to investigate it. Part A:    i-  Give a brief description of the situation.

Free trade, how to determine free trade for small country

how to determine free trade for small country

report on internationally competing firms , Investment analysis report on ...

Investment analysis report on internationally competing firms Students will be organized randomly into small groups (typically 6), and will prepare an investment analysis of c

Can currency boards make low-inflation policies credible, Q. Based on the c...

Q. Based on the case study, answer the following question: Can currency boards make low-inflation policies credible? Answer: Currency boards have the power to bring in anti-

Partial equilibrium analysis, how do I graph partial equilibrium analysis w...

how do I graph partial equilibrium analysis with transport costs

The theory of international trade, Explain the classical theory of employme...

Explain the classical theory of employment with relaxed assumption?

Does foreign aid lead to economic growth?, Question 1: The main challen...

Question 1: The main challenge facing governments in the 21st century revolves around containing and/or downsizing of public spending. Explain why reduced government interventi

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