This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: The price of a computer in the United States is 1,000. The price of a car in Germany is 10,000 ... (Read 41 times)

bb

  • Hero Member
  • *****
  • Posts: 544
on: Jun 29, 2018
The price of a computer in the United States is 1,000. The price of a car in Germany is 10,000 euros. The current exchange rate is 0.9 euros per dollar.
 
  a) If a computer is exported from the United States to Germany with no barriers to trade, what will be the price of the computer in Germany? b) If a car is imported to the United States from Germany with no barriers to trade, what will be the price of the car in the United States? c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported from the United States change in Germany? d) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a car imported to the United States from Germany change in the United States?

Question 2

What factors affect the demand for money?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Jevvish

  • Sr. Member
  • ****
  • Posts: 326
Reply #1 on: Jun 29, 2018
Answer to Question 1

a) The price of an American computer in Germany is 1,000  0.9 euros per dollar, which is 900 euros.
b) The price of a German car in the United States is 10,000 euros/0.9 euros per dollar = 11,111.
c) The new exchange rate is 0.9 euros per dollar  1.1 = 0.99 euros per dollar. So the new price of a U.S. computer in Germany is 1,000  0.99 euros per dollar = 990 euros. The price of a U.S. computer in Germany rises by 10 percent.
d) The new price of a German car in the United States is 10,000 euros/0.99 euros per dollar = 10,101. So the price of a German car in the United States falls by about 10 percent.

Answer to Question 2

Four factors influence the demand for money. First is the price level. An increase in the price level increases the nominal demand for money. Second is the interest rate. An increase in the interest rate raises the opportunity cost of holding money and decreases the quantity of money demanded. Third is real GDP. An increase in real GDP increases the demand for money. Fourth is financial innovation. Innovations that lower the cost of switching between money and other assets decrease the demand for money.


bb

  • Member
  • Posts: 544
Reply 2 on: Jun 29, 2018
Wow, this really help

helenmarkerine

  • Member
  • Posts: 324
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Did you know?

Atropine, along with scopolamine and hyoscyamine, is found in the Datura stramonium plant, which gives hallucinogenic effects and is also known as locoweed.

Did you know?

Today, nearly 8 out of 10 pregnant women living with HIV (about 1.1 million), receive antiretrovirals.

Did you know?

Only 12 hours after an egg cell is fertilized by a sperm cell, the egg cell starts to divide. As it continues to divide, it moves along the fallopian tube toward the uterus at about 1 inch per day.

Did you know?

A strange skin disease referred to as Morgellons has occurred in the southern United States and in California. Symptoms include slowly healing sores, joint pain, persistent fatigue, and a sensation of things crawling through the skin. Another symptom is strange-looking, threadlike extrusions coming out of the skin.

Rate of Residential Change, Past Year, in the United States Rate of Residential Change, Past Year, in the United States
A vacuum-operated EGR valve. The vacuum to the EGR valve is computer controlled by the EGR valve ... A vacuum-operated EGR valve. The vacuum to the EGR valve is computer controlled by the EGR valve ...
Leading Sites of Cancer Deaths in the United States, 2013 Leading Sites of Cancer Deaths in the United States, 2013
GDP per Capita in the United States, 1870–2009 GDP per Capita in the United States, 1870–2009
Computer Forensics: Principles and Practices 1st Edition Computer Forensics: Principles and Practices 1st Edition
Suppose the market supply curve is p = 5Q. If price increases from 10 to 15, the change in ... Suppose the market supply curve is p = 5Q. If price increases from 10 to 15, the change in ...
Video: Bone processes - resorption and deposition, remodeling and response to stress in adult bones

For a complete list of videos, visit our video library