The dollar has been steadily depreciating in value relative to other major global currencies, including the...

The dollar has been steadily depreciating in value relative to other major global currencies, including the Japanese Yen, over the past six months.

a) How would this impact the competitiveness of US automotive firm General Motors competing with Japanese automotive firm Toyota in global markets?

b) How would the Bank of Japan implementing expansionary monetary policy impact the competitiveness of Toyota? How do you know?

c) Suppose the US government wants to, at a minimum, maintain its market share in the domestic automobile market, so they implement tariffs on cars imported from Japan. Illustrate and describe how such a policy will redistribute welfare within the US. Who gains and who loses? How does this trade policy impact the volume of trade?

Expert Solution

The dollar has been steadily depreciating its value relative to other major currencies including Japanese Yen a.Depreciation positively impact the competitiveness of US automotive firm General Motors that is competing with Japanese automotive firm Toyota in global market . Depreciation of dollar against Japanese Yen results goods produced by US automotive firms General Motors becomes cheaper in global market relative to Japan automotive firm. It leading to switching of expenditure from Japan firm to US automotive firm. So depreciation of dollar increases the competitiveness of U.S. firm b. Exapansionary monetary policy will increase money supply of Japan. Then supply of Yen will higher than its demand . It will depreciate the Yen in terms of foreign currencies . It makes goods( cars ) produced by Toyota will be cheaper to other foreign nation. It will increase the export of Toyota cars. There it increase the competitiveness of Japan automotive firm Toyota c. U.S government implements tariffs on cars imported from Japan. Then price of Japan cars rises to OP1 from OP. As a result of imposition of tariff , consumer surplus will decline by reducing consumption from OQ3 to OQ2. It will increase the revenue of government by MNab. When imports are restricted with tariff , producer surplus will increase. It is domestic producer who gain due to tariff because of increasing production from OQ to OQ1 It will reduce the volume of trade as result of imposition of tariff on Japan cars. It will redistribute the wealth from consumer to producer

Rahul Sunny answered 1 year ago

Since January 2017 the dollar has been losing value (depreciating) against most major currencies in particular...

Since January 2017 the dollar has been losing value (depreciating) against most major currencies in particular the Euro. The depreciating dollar is surprising given the strong U.S. economy. In addition, the recently passed tax cut insures the U.S. will be financing an even larger annual deficit. This will put even more pressure on interest rates to attract buyers for U.S. government bonds. What are your thoughts on why the dollar is declining?

a. The Australian dollar against the US dollar (and against other major currencies) has appreciated in...

a. The Australian dollar against the US dollar (and against other major currencies) has appreciated in recent months (mid-March 2020 to early June 2020). Identify the underlying drivers and the implications of this rising exchange rate in Australia.

what are the major trade currencies and what is their relative proportion in global trade?

An increase in the value of the dollar relative to all foreign currencies means the pric...

An increase in the value of the dollar relative to all foreign currencies means the pric of foreign goods purchased by the dollar ___. A)increases B)falls C)remains unchanged

2.suppose the value pf the dollor decline relative to other currencies. how does the decline affect...

2.suppose the value pf the dollor decline relative to other currencies. how does the decline affect the three function of money. 3. does inflation, which is an increase in the price level, affect the three function of money? if so, how?

The Services sector has been steadily rising in relative importance in GDP of the United States,...

The Services sector has been steadily rising in relative importance in GDP of the United States, as well as elsewhere around the world. Since "services" have been identified as "non-tradable" (e.g., it is difficult to export haircuts), it may be argued that this trend will likely slow the rapid growth in international trade. Discuss.

The Services sector has been steadily rising in relative importance in GDP of the United States,...

The Services sector has been steadily rising in relative importance in GDP of the United States, as well as elsewhere around the world. Since "services" have been identified as "non-tradable" (e.g., it is difficult to export haircuts), it may be argued that this trend will likely slow the rapid growth in international trade. Discuss.

1) How will a lower Fed Funds Rate affect the value of dollar relative to other...

1) How will a lower Fed Funds Rate affect the value of dollar relative to other countries, assuming the US inflation rate doesn’t change? How will the value of dollar change if other countries’ central banks take the same action? 2) What are some of the concerns policy makers may have regarding a further decrease in the Fed Funds Rate at this juncture? 3)Why is a wholesale flight out of the dollar unlikely in the immediate future?

A number of people (including the President) have been concerned about the value of the dollar...

A number of people (including the President) have been concerned about the value of the dollar as it affects our international competitiveness. On the other hand the value of the dollar obviously also affects the purchasing power of American consumers. In what sense are these interests in conflict? Which is more important?

1- When the American dollar worth more in relation to currencies of other countries, would an...

1- When the American dollar worth more in relation to currencies of other countries, would an American be more likely to buy American-made or foreign-made jeans? 2- Define money and explain the important functions of money? 3- When interest rates fall, how might you change your economic behavior?

Question

The dollar has been steadily depreciating in value relative to other major global currencies, including the...

Solutions

Expert Solution

Related Solutions

Since January 2017 the dollar has been losing value (depreciating) against most major currencies in particular...

a. The Australian dollar against the US dollar (and against other major currencies) has appreciated in...

what are the major trade currencies and what is their relative proportion in global trade?

An increase in the value of the dollar relative to all foreign currencies means the pric...

2.suppose the value pf the dollor decline relative to other currencies. how does the decline affect...

The Services sector has been steadily rising in relative importance in GDP of the United States,...

The Services sector has been steadily rising in relative importance in GDP of the United States,...

1) How will a lower Fed Funds Rate affect the value of dollar relative to other...

A number of people (including the President) have been concerned about the value of the dollar...

1- When the American dollar worth more in relation to currencies of other countries, would an...