When the exchange rate between pounds and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has appreciated depreciated inflated deflated
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When the exchange rate between pounds and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has
appreciated
inflated
deflated
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- In 2021, the exchange rate between the Swedish Kronor (SK) and the $ dollar was E$/SK 0.07 $, while the exchange rate between the Indian Rupee (IND) and the $ dollar was equal to EIND/$ = 70.25 IND. Today the SK is equal to E$/SK = 0.11 $ and the $ is equal to 76.25 IND. By what percentage did the cross exchange rate of the Indian Rupee in Swedish kronor (that is, the number of kronor that can be purchased with Indian Rupees) change over the last year?A currency depreciates if it buys less of a foreign currency than it did before. The US dollar depreciated against what currency(a) from month 1 to month 2? Explain using the chartAssume that the export price of a Toyota Corolla from Osaka, Japan is ¥4,200,000. The exchange rate is ¥109.60/$. The forecast rate of inflation in the United States is 2.5% per year and is 1.5% per year in Japan. Use this data to answer the following questions on exchange rate passthrough. What was the export price for the Corolla at the beginning of the year expressed in the U.S. Dollars? Assuming purchasing power parity holds, what should the exchange rate be at the end of the year? Assuming a 65% pass-through of the exchange rate, what will be the dollar price of a Corolla at the end of the year?
- In the last 4 years, the exchange rate Pound to Euro depreciated (decreased) to an average of 1.13 (from 1.30 before 2016). When citizens from the UK would go on holidays in a Euro zone country (e.g. Spain), would a lower exchange rate of 1.13(Sterling Pound to Euro) instead of an exchange rate of 1.30 (Pound to Euro) be of advantage or disadvantage for British tourists in Europe? Explain.How would the devaluation of the Argentine peso (ARS$) affect your contribution in the home currency (US$)? Current contribution in USD (home currency): $ 0.000 Million Contribution in USD after 15% drop: USD $ 0.000 Millions Contribution in USD after 25% drop: USD $ 0.000 MillionASAP At the beginning of the year, the exchange rate between the Brazilian real and the U.S. dollar was 1.2 reals per dollar. Over the year, Brazilian inflation was 8 percent and U.S. inflation was 2 percent. Explain what should we expect to happen to the U.S. dollar relative to Brazilian real? Provide theintuition.
- Currently the foreign exchange market is valuing the Canadian dollar at Ez while the Canadian government has placed a value of Epar on the Canadian dollar. Exchange rate Er (Euro/$C) E3 E2 Enar D3 E1 D2 D1 Quantity of Domestic Assets The Canadian dollar value (Epar) placed by the Canadian government is said to be relative to the market value (E3). 수 One approach to close the gap between E3 and Epar is for the BOC to 수 The approach taken by the BOC wll : Ms and cause i-rates to As a result of the i-rate change the internal mechanism: Gross Investment (I) will 수 AD (Aggregate Demand) will GDP will and Pievel (inflation) will As a result of the i-rate change the external mechanism: The new i-rates will cause foreigners to 수 Canadian bonds. The change in demand for Canadian bonds will cause the demand for $C to AD (Aggr Demand) will GDP will and Plevel (inflation) willOver the last 10 years, the average rate of inflation has been 1.51%. What is the purchasing power of a dollar today in terms of what a peso could purchase in 2012?(b) Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. (i) What is the nominal exchange rate? Use the expression: ereal= enor*P / Pfor where ereal is real exchange rate, enor is nominal exchange rate, P is domestic price level and Pfor is foreign price level. (ii) Suppose the real exchange rate rises by 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change?
- Suppose we consider two countries, a home country and a foreign country. In the home country, the expected inflation rate is equal to 3.6 per cent, while the expected inflation rate abroad is equal to 4.2 per cent. Furthermore, it is known that the nominal interest rate in the home country is equal to 3.4 per cent, while the nominal interest rate abroad is equal to 4 per cent.a) First explain what is meant by absolute purchasing power parity, relative purchasing power parity and uncovered nominal interest rate parity. Then give an estimate of the expected growth in the nominal exchange rate based on each of the three theories. Finally, show that if both relative purchasing power parity and uncovered nominal interest rate parity apply, real interest rates in the two countries will be approximately equal.Assume that JA$ 1.00 = GUY $ 2.00. In each scenario below you are asked to find the new value of the Jamaican Dollar (JMD). You will always start a new calculation using the original exchange rate given above. Further, you are required to arrive at a possible explanation for each change and illustrate same on a diagram of the market for Jamaican Dollars. (a) The JMD depreciates by 1%. (b) The JMD depreciates by 3% (c) The JMD appreciates by 2%. (d) The JMD appreciates by 4%.As on November 3, 2021 One US Dollar (USD) sells for 1.24 Canadian Dollar (CAD). Which are the factors or authorities responsible for maintaining these currency exchange rates?