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Chapter 33: Q.15 (page 753)

At point E in Figure 33-4, how many dollars per year are traded for the equilibrium quantity of pounds?

Short Answer

Expert verified

30billion pounds are traded for the equilibrium quantity of dollars.

Step by step solution

01

Given Information

Under the adaptable/drifting conversion scale framework, very much like the basic hypothesis of interest and supply, the interest for money bears an opposite relationship with its cost (regarding the homegrown cash of the nation), its stockpile displays an immediate relationship with its cost (concerning the homegrown money).

02

Explanation

The place of connection of the interest and supply bends yields the balance amount and cost of the unfamiliar money in the unfamiliar trade.

Now, £1=$1.50from the equilibrium point E figure and the pounds exchanged are £30billion per year. At this money value, the interest for and supply of pounds clears the market.

Hence30 billion pounds are traded for the equilibrium quantity of dollars.

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Most popular questions from this chapter

On Wednesday, the exchange rate between the euro and the U.S. dollar was \(1.33 per euro, and the exchange rate between the Canadian dollar and the U.S. dollar was U.S. \)0.90 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 2015?

Suppose that during a recent year for the United States, the current account balance was -\(0.5trillion, and the net acquisitions of financial assets by U.S. residents and government entities was +\)50.1trillion.

a. What was the balance on the financial account during the year?

b. What was the net incurrence of financial liabilities by U.S. residents and government entities during the year?

On Wednesday, the exchange rate between the Japanese yen and the U.S. dollar was \(0.010 per yen. On Thursday, it was \)0.009. Did the dollar appreciate or depreciate against the yen? By how much, expressed as a percentage change?

Determine if each of the following items results in a surplus or deficit in the current account of the balance of payments.

a. A Central European corporation offers products to a chain of hobby stores in the United States.

b. Japanese citizens pay a U.S. travel agency to arrange hotel accommodations, ground transportation, and tours of many U.S. cities, including New York, Chicago, and Orlando.

c. A Mexican corporation hires an accounting firm in the United States to audit its financial accounts.

d. Following a severe earthquake in Pakistan, churches and mosques in the United States contribute humanitarian aid to the country.

e. A Canadian corporation supplies raw materials to a US microprocessor maker.
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