Naked Economics Chapter 18 Summary
1. Chapter 18 problem 1
a) Us net exports decrease when an American arts professor spends the summer touring museums in Europe. US imports increase when he spends the money buying foreign goods and services, while its exports unchanged.
b) US net exports increase when the students in Paris flock to see the latest movie from Hollywood. US exports rise as foreigners are buying a US good, and its imports remain unchanged
c) US net exports decline when the uncle buys a new Volvo. US imports rise when a US citizen buys a foreign good, while its exports remain unchanged.
d) US net exports increase when the student bookstore at the university sells a pair of 501 jeans. US exports rise as foreigners are buying a US good, and its imports remain …show more content…
The supply of the dollar will increase, reducing the value of the dollar as compared to the Euro. The real interest rate in US will increase due to decrease in the supply of loanable funds caused by a movement of both foreign capital as well as domestic capital from us to Europe. The US real exchange rate will depreciate which will decrease its exports prices and increase its prices. However, US net exports will increase.
5. When the dollar gets stronger against major foreign currencies, does the price of French wine rise or fall in the United States? Would this be a good time to travel to Australia? What happens to US exports?
When dollar gets stronger, it attracts more exchange value against other currencies. The price of the French wine gets cheaper considered the appreciated of the US dollar. This is a very good time to visit since, the home country currency is stronger, would be able to get things at cheaper rate in the holiday.
Since the value of currency appreciated, more value has to be paid by other nations to purchase US products. However, exports would
a) Us net exports decrease when an American arts professor spends the summer touring museums in Europe. US imports increase when he spends the money buying foreign goods and services, while its exports unchanged.
b) US net exports increase when the students in Paris flock to see the latest movie from Hollywood. US exports rise as foreigners are buying a US good, and its imports remain unchanged
c) US net exports decline when the uncle buys a new Volvo. US imports rise when a US citizen buys a foreign good, while its exports remain unchanged.
d) US net exports increase when the student bookstore at the university sells a pair of 501 jeans. US exports rise as foreigners are buying a US good, and its imports remain …show more content…
The supply of the dollar will increase, reducing the value of the dollar as compared to the Euro. The real interest rate in US will increase due to decrease in the supply of loanable funds caused by a movement of both foreign capital as well as domestic capital from us to Europe. The US real exchange rate will depreciate which will decrease its exports prices and increase its prices. However, US net exports will increase.
5. When the dollar gets stronger against major foreign currencies, does the price of French wine rise or fall in the United States? Would this be a good time to travel to Australia? What happens to US exports?
When dollar gets stronger, it attracts more exchange value against other currencies. The price of the French wine gets cheaper considered the appreciated of the US dollar. This is a very good time to visit since, the home country currency is stronger, would be able to get things at cheaper rate in the holiday.
Since the value of currency appreciated, more value has to be paid by other nations to purchase US products. However, exports would