Week 2 Class Problems Fin403

Chapter 4 2.Inflation effectuate on permute Rates. come across that the U.S. pretension rate becomes high relative to Canadian inflation. former(a) things be equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sales event, and (c) balance wheel place of the Canadian dollar? ANSWER: supplicate for Canadian dollars should increase, supply of Canadian dollars for sale should decrease, and the Canadian dollars jimmy should increase. 3.Interest Rate Effects on Exchange Rates. Assume U.S. stake rates fall relative to British interest rates. Other things existence equal, how should this affect the (a) U.S. demand for British pounds, (b) supply of pounds for sale, and (c) residue value of the pound? ANSWER: Demand for pounds should increase, supply of pounds for sale should decrease, and the pounds value should increase. 4.Income Effects on Exchange Rates. Assume that the U.S. income level rises at a much higher(prenominal) rate than does the Canadian income level. Other things being equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar? ANSWER: Assuming no effect on U.S.

interest rates, demand for dollars should increase, supply of dollars for sale may not be affected, and the dollars value should increase. 5.Trade Restriction Effects on Exchange Rates. Assume that the Japanese government relaxes its controls on imports by Japanese companies. Other things being equal, how should this affect the (a) U.S. demand for Japanese waste, (b) supply of hankering for sale, and (c) equilibrium value of the yen? ANSWER: Demand for yen should not be affected, supply of yen for sale should increase, and the value of yen should decrease. 18. Factors Affecting Exchange Rates. Mexico tends to have much higher inflation than the United States and also much higher interest rates than the United States. Inflation and... If you want to get a full essay, order it on our website: Ordercustompaper.com

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