Question

Please only answer if you are 100% sure and I need the answers now.

QUESTION 6

1. Suppose that a Japanese firm imports iron for its operations from the US and sells its finished products to Spain. If the yen depreciates against the US dollar and appreciates against the euro, which of the following will occur, all else being equal?

   		The Japanese firm's value will increase because they will pay less yen for their imports.
   		The Japanese firm's value will increase because they will receive more yen from their exports.
   		The Japanese firm's value will be unaffected by the exchange rate fluctuations.
   		None of the above.

5 points   

QUESTION 7

1. If a country's currency appreciates relative to its trading partners, its balance of trade should rise in the long run, all else being equal.

   True

   False

5 points   

QUESTION 8

1. Use the following information to answer the next three questions.

   Transactions between Australia and the rest of the world in 2017 are shown below.

   1. The Australian government sells 18 million Australian dollars worth of treasury securities to UK citizens.
   2. Australian companies sell 30 million Australian dollars worth of iron in the UK.
   3. Australian companies pay 5 million Australian dollars in dividends to investors abroad.
   4. Australian citizens spend 35 million Australian dollars while touring the US.
   5. Australian government sends 12 million Australian dollars in aid to Africa.
   6. US citizens spend 8 million Australian dollars in tuition at Australian universities.
   7. Australian central bank buys 4 million Australian dollars worth of gold.

   Find the current account balance in terms of millions of Australian dollars.  

   		-9
   		-2
   		-14
   		none of the above

5 points   

QUESTION 9

1. Find the capital account balance in terms of millions of Australian dollars. Do not use currency symbols when entering your response.

5 points   

QUESTION 10

1. Based on the information provided, which of the following statements is true?

   		Australia was a net importer of capital in 2017.
   		Australia's balance of trade will have no affect on the value of the Australian dollar, all else being equal.
   		Australia exported more goods and services than it imported in 2017.
   		None of the above.

Answer 1

Question 6

None of the above

Ideally, the firm' value would decrease because it will become more expensive for the firm to import and the proceeds from exports would be lesser in terms of yen. So, the company's margins will squeeze.

Question 7

False

If a country's currency becomes more expensive, its exports drop as they become expensive whereas imports from other countries rise, as they become cheaper. So, the balance of trade would drop, all else being equal.

Question 8

-14

Transactions that are recorded in the current account are imports and exports, income transfers between countries and gifts and aids. In the given question, following transactions are going to be recorded in the current account (As a rule of thumb, whenever money leaves the country, it is recorded as a negative and whenever foreign money enters the country, it is taken as a positive)

Australian companies sell 30 million Australian dollars worth of iron in the UK (positive)

Australian companies pay 5 million Australian dollars in dividends to investors abroad (negative)

Australian citizens spend 35 million Australian dollars while touring the US (negative)

Australian government sends 12 million Australian dollars in aid to Africa (negative)

US citizens spend 8 million Australian dollars in tuition at Australian universities (positive)

So, current account balance = 30-5-35-12+8 = -14

Question 9

14

Following transactions are recorded in the capital account

The Australian government sells 18 million Australian dollars worth of treasury securities to UK citizens (positive)

Australian central bank buys 4 million Australian dollars worth of gold (negative)

So, capital account balance = 18-4 = 14

Question 10

Australia was a net importer of capital in 2017