Chapter 33: Q. 1FCT (page 751)
Other things being equal, what do you think should have happened in 2015 to the prices of goods and services exported by U.S. firms?
The rankings are modified to account differences in international trading rates first from prior period.
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Explain the demand for and supply of foreign exchange.
Explain how the following events would affect the market for the Mexican peso, assuming a floating exchange rate.
a. Improvements in Mexican production technology yield superior guitars, and many musicians around the world buy these guitars.
b. Perceptions of political instability surrounding regular elections in Mexico make international investors nervous about future business prospects in Mexico.
On Wednesday, the exchange rate between the euro and the U.S. dollar was per euro, and the exchange rate between the Canadian dollar and the U.S. dollar was U.S. per Canadian dollar. What is the exchange rate between the Canadian dollar and the euro?
Why do you suppose that foreign expenditures on U.S. exports declined during ?
Explain how the following events would affect the market for South Africa's currency, the rand, assuming a floating exchange rate.
a. A rise in U.S. inflation causes many U.S. residents to seek to buy gold, which is a major South African export good, as a hedge against inflation.
b. Major discoveries of the highest-quality diamonds ever found occur in Russia and Central Asia, causing a significant decline in purchases of South African diamonds.
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