Question

In: Economics

Classify each of the following as more likely to be on the demand or supply side...

Classify each of the following as more likely to be on the demand or supply side of the exchange rate market for Australian dollars.

A U.S. firm Ford selling cars in Australia

Answer: (circle the correct answer)                                                                                    (3 points)

Demand     Supply

An Australian tourist Oliver visiting the U.S.

Answer: (circle the correct answer)                                                                                       (3 points)

Demand     Supply

A U.S. investor who seeks to invest in the Australian Kangaroo breeding business

Answer: (circle the correct answer)                                                                                       (3 points)

Demand     Supply

An Australian firm Rio Tinto selling metal in the U.S.

Answer: (circle the correct answer)                                                                                       (3 points)

Demand    

A U.S. tourist Jimmy visiting Australia

Answer: (circle the correct answer)                                                                                      (3 points)

Demand    

An Australian investor wishing to invest in the U.S. restaurant business

Answer: (circle the correct answer)                                                                                    (3 points)

   Supply

A currency speculator who thinks that the Australian dollar is going to strengthen

Answer: (circle the correct answer)                                                                                   (3 points)

Demand     Supply

Solutions

Expert Solution

Solution-

A U.S. firm Ford selling cars in Australia

The correct answer is Demand.

Reason-

Since there will be demand for Australian dollars.

An Australian tourist Oliver visiting the U.S.

The correct answer is Supply

Reason-

The Australian tourist would supply the Australian dollars in exchange for American dollars.

A U.S. investor who seeks to invest in the Australian Kangaroo breeding business

The correct answer is Demand.

Reason-

The US investor would demand Australian dollars to invest.

An Australian firm Rio Tinto selling metal in the U.S.

The correct answer is Demand.

A U.S. tourist Jimmy visiting Australia

The correct answer is Demand

Reason-

The U.S tourist would demand the Australian dollars in exchange for American dollars.

An Australian investor wishing to invest in the U.S. restaurant business

The correct answer is Supply

Reason-

The Australian investor would supply Australian dollars to invest.

A currency speculator who thinks that the Australian dollar is going to strengthen

The correct answer is Demand.

Rahul Sunny answered 2 years ago
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