Author Question: If a firm in Thailand borrows dollars from a U.S. bank, its interest payments on the loan in bahts ... (Read 57 times)

jlmhmf · **on:** Jun 29, 2018

If a firm in Thailand borrows dollars from a U.S. bank, its interest payments on the loan in bahts will decrease if the baht appreciates against the dollar.

Indicate whether the statement is true or false

Question 2

Was the price of almonds expected to rise or fall? Did a change in the supply of or demand for almonds bring about this expected change in the price?

What will be an ideal response?

shaquita · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

TRUE

Answer to Question 2

The price of almonds is expected to fall because the increase in the quantity of almonds exceeds the increase in growers' receipts. Specifically, when the quantity increases by 22 percent, if the price does not change, growers' receipts would also increase by 22 percent. Because growers' receipts are expected to increase by only 17 percent, it must be the case that the price of almonds is expected to fall.
If a change in demand is expected to lower the price of almonds, it must be the case that the demand for almonds is expected to decrease. But if the demand for almonds decreases, then the quantity of almonds decreases, which is not what is expected.
If a change in supply is expected to lower the price of almonds, it must be the case that the supply of almonds is expected to increase. And if the supply of almonds increases, then the quantity of almonds increases, which is the outcome noted above. Consequently it is a change in supply, specifically an increase in supply, that is bringing about the expected fall in price.