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- If the exchange rate between the US Dollar ($) and the Euro (E) goes from being $7/E to $6/E, we say that the US Dollar has __________ relative to the Euro. a) appreciated b) arbitraged c) stagnated d) depreciatedIf the exchange rate between the US Dollar ($) and the Indian Rupee (Rs.) goes from being Rs. 60/$ to Rs. 65/$, we say that the Indian Rupee has __________ relative to the US Dollar. a) appreciated b) arbitraged c) stagnated d) depreciatedIn the last 4 years, the exchange rate Pound to Euro depreciated (decreased) to an average of 1.13 (from 1.30 before 2016). When citizens from the UK would go on holidays in a Euro zone country (e.g. Spain), would a lower exchange rate of 1.13(Sterling Pound to Euro) instead of an exchange rate of 1.30 (Pound to Euro) be of advantage or disadvantage for British tourists in Europe? Explain.
- View the data below for the exchange rate between the US dollar and the Japanese yen. How many yen could you get per dollar at the earliest date shown on the chart? Explain. How many yen could you get per dollar at the most recent date shown on the chart? Explain. Has the dollar appreciated or depreciated in value over time? Explain.Based on the Exchange rates above, Which of the following is true? A)More pounds are needed to buy a dollar, so the dollar is appreciating B)The dollar is less expensive in pounds and is depreciating C)The dollar is growing stronger against the pound D)The dollar is more expensive in pounds and is appreciating Year 2014 2015 2016 US $ 1$ 1$ 1$ British Pound .85 .70 .60a) Suppose a computer sells for US$1,200 in the U.S. and for £855 in London. If the exchange rate is £65 per dollar, is there any arbitrage (profit opportunity)? Explain (b) If the Canadian dollar price of one Euro was C$1.30 in 2003 and the exchange rate adjusted to 0.85 Euro per C$ in 2004, did the Canadian dollar appreciate or depreciate against the Euro. Explain.
- If the U.S. dollar appreciates from 1.25 Swiss franc per U.S. dollar to 2 francs per dollar, then the franc depreciates from _______ (x.x) U.S. dollars per franc to ________ (x.x) U.S. dollars per franc.Suppose that yesterday, the U.S. dollar was trading on the foreign exchange market at 0.75 eurosper U.S. dollar and today the U.S. dollar is trading at 0.80 euros per U.S. dollar. Which of the twocurrencies (the U.S. dollar or the euro) has appreciated and which has depreciated today?b) Suppose that the exchange rate for the Mexican peso fell from 15 pesos per U.S. dollar to 10 pesosper U.S. dollar. What is the effect of this change on the quantity of U.S. dollars that people plan tobuy in the foreign exchange market?c) Suppose that the exchange rate rose from 80 yen per U.S. dollar to 90 yen per U.S. dollar. What isthe effect of this change on the quantity of U.S. dollars that people plan to sell in the foreignexchange market?With an exchange rate of 0.73 euros for 1 dollar, a US company is able to purchase 100 trucks from Germany. If the exchange rate shifted to 1 euro for 1 dollar, what would happen to the price the US company would pay for trucks? A)The price would go down, because the US dollar has appreciated. B)The price would go up, because the US dollar has depreciated. C)The price would go up, because the US dollar has appreciated. D)The price would go down, because the US dollar has depreciated.
- Suppose the U.S.-EU exchange rate is $1.15 per Euro, the U.S. has 5% inflation, and the EU has 10% inflation. Under these conditions the real U.S.-EU exchange rate, rounded to the nearest cent, is approximately: $1.20 per Euro $1.10 per Euro $1.30 per Euro $1.09 per EuroChanges in the price of U.S $ from 0.89 euros (E0) to 0.95 euros (E1) represents either a currency appreciation or depreciation. If EO is the old price of U.S. $ and E1 is the new price, U.S. $ has [Please review the exchange rate slides before attempting.] A) appreciated by 4.59%. B) appreciated by 6.70%. C)appreciated by 7.70%. D) depreciated by 6.70%In 1992, 18.6 million Canadians visited the United States, but only 11.8 million U.S. residents visited Canada. By 2002, roles had been reversed: more U.S. residents visited Canada than vice versa. Why did the tourism reverse direction? Canada didn’t get any warmer from 1992 to 2002 – but it did get cheaper. The reason is a large change in the exchange rate: in 1992 Canadian dollar was worth $0.80, but by 2002 it had fallen in the value by 20% to about $0.65. This means that Canadian goods and services, particularly hotel rooms and meals, were about 20% cheaper for Americans in 2002 compared to 1992. American vacations had become 20% more expensive for Canadians. Canadians responded by vacationing in their own country or in other parts of the world. Foreign travel is an example of a good that has a high price elasticity of demand: elasticity=4.1. One reason is that foreign travel is a luxury good for most people – you may regret not going to Paris this year, but you can live…