Other things the same, if the exchange rate changes from 30 Thai bhat per dollar to...

Other things the same, if the exchange rate changes from 30 Thai bhat per dollar to 25 Thai bhat per dollar, then the dollar has

A. appreciated and so buys fewer Thai goods.

B. depreciated and so buys more Thai goods.

C. appreciated and so buys more Thai goods.

D. depreciated and so buys fewer Thai goods.

Expert Solution

Correct option (D).

Initial exchange rate of 30 Baht per dollar means 1 dollar could buy 30 Baht in forex market, but new exchange rate of 25 Baht per dollar means 1 dollar can now buy 25 baht in forex market. So, value of dollar is lower, so dollar has depreciated and can buy fewer Thai goods.

Rahul Sunny answered 2 years ago

The spot exchange rate for the Thai bhat is 30.000 bhat to the dollar or .00333...

The spot exchange rate for the Thai bhat is 30.000 bhat to the dollar or .00333 dollar to the bhat. For capital budgeting purposes, Ramo Corp needs to estimate the exchange rate 5 years from now. The U.S. interest rate is 2%; the interest rate in Thailand is 6%. Calculate The estimated 5 year forward rate between the 2 currencies. Please show all works and steps

The US dollar (USD) to Thai baht (THB) spot exchange rate was 100 USD = 3231.78...

The US dollar (USD) to Thai baht (THB) spot exchange rate was 100 USD = 3231.78 THB in September 2018. By January 2019 it had moved to 100 USD = 3118.74 THB. The 30-day forward rate then was 100 USD = 3198.70 THB. i. Calculate the appreciation / depreciation of the THB versus the USD. Did the THB appreciate or depreciate against the USD? ii. What was the interest rate differential between the two currencies in January 2019? i. Show...

1. When the exchange rate between the U.S. dollar and Japanese yen changes from $1 =...

1. When the exchange rate between the U.S. dollar and Japanese yen changes from $1 = 100 yen to $1 = 90 yen: All Japanese producers and consumers will lose. U.S. consumers of Japanese TV sets will benefit. U.S. auto producers and autoworkers will lose. Japanese tourists to the U.S. will benefit. 2. The Social Security Trust Fund (OASI): Is currently depleted. Is currently paying out less than it is receiving in payroll taxes. Is required by law to be...

Suppose the current exchange rates between the US dollar ($) and the Indian rupee (INR), Thai...

Suppose the current exchange rates between the US dollar ($) and the Indian rupee (INR), Thai Bhat (THB) and Philippine peso (PHP) are 68.0724 INR/$, 32.1836 THB/$, and 52.3803 PHP/$, respectively. In addition, you observe that a Big Mac costs 180.00 INR in India, 119.00 THB in Thailand, and 134.00 PHP in the Philippines. If the US average price of a Big Mac is 5.28$, a) What would the Big Mac Index imply for the over- or undervaluation of these...

Other things the same, an increase in the money supply causes the interest rate to rise...

Other things the same, an increase in the money supply causes the interest rate to rise to balance money supply and money demand. True False If the government increases expenditures by $200 billion dollars, the MPC = .80 and there are no crowding out effects, in which direction and by how far does the aggregate demand curve shift? it shifts left by $360 billion. it shifts left by $1,000 billion. it shifts right by $360 billion. it shifts right by...

Other things the same, if the Fed increases the money supply, the interest rate rises so...

Other things the same, if the Fed increases the money supply, the interest rate rises so aggregate demand shifts right. rises so aggregate demand shifts left. falls so aggregate demand shifts right. falls so aggregate demand shifts left.

From 1995-2010, the real exchange rate between the Australian dollar and the U.S. dollar (measured...

From 1995-2010, the real exchange rate between the Australian dollar and the U.S. dollar (measured as the price of U.S. goods divided by the price of Australian goods) fell at an average rate of 5% per year. Over the same period, the average annual rate of inflation in Australia exceeded U.S. inflation by 2% per year. Given this information, what was the average annual percentage change in the nominal exchange rate between the two currencies,...

Suppose the U.S. dollar-euro exchange rate is 1.1 dollars per euro, and the U.S. dollar-Mexican peso...

Suppose the U.S. dollar-euro exchange rate is 1.1 dollars per euro, and the U.S. dollar-Mexican peso rate is 0.1 dollars per peso. What is the euro-peso rate? ____ euros per Mexican peso. (Enter your response rounded to three decimal places.)

9) Based on the premise that, other things equal, countries would prefer a fixed exchange rate,...

9) Based on the premise that, other things equal, countries would prefer a fixed exchange rate, which of the following statements is NOT true? A) Fixed rates provide stability in international prices for the conduct of trade. B) Fixed exchange rate regimes necessitate that central banks maintain large quantities of international reserves for use in the occasional defense of the fixed rate. C) Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal...

"Other things the same, an increase in the US interest rate" shifts money demand outward incentivizes...

"Other things the same, an increase in the US interest rate" shifts money demand outward incentivizes firms to invest less makes the dollar depreciate decreases the opportunity cost of holding dollars

Question