Sunday, June 1, 2014
Help me with my economics homework please..?
Help me with my economics homework please..?
For each of the following, state whether it creates a demand for or a supply of U.S dollars: A) A japanese automobile firm builds an assembly plant in Ohio. B) A U.S importer purchases a shipload of Saudi Arabia oil C) A U.S student spends a summer in england studying in Oxford D) a french exporter ships products to Argentina using American freighter E) Currrency traders feel that the value of the U.S dollar will fall in the near future and act on that feeling
Economics - 2 Answers
Random Answers, Critics, Comments, Opinions :
1 :
These situations all refer to the foreign exchange market. The basic concept that applies is that goods and services are paid for in the currency of the supplier, so the buyer exchanges his home currency for the currency that the goods and services are traded in. The buyer thus sells, or supplies, his country's currency and buys, or demands, the currency of the seller. With that in mind, here are the answers: A) Demand for US dollars B) Supply C) Supply D) Demand E) Supply For E, the currency traders will sell US dollars now, before the value decreases, and buy them later, after the value decreases.
2 :
A) demand for USD. this is an example of Foreign direct investment. The Japanese firm demand US dollar in order to invest in US. B) Supply for USD. US importer will offer USD to purchase Saudi Arabia Riyal before he/she can purchase the oil. C) Supply for USD. Same concept as in (B) US student offer USD to purchase British Pound before study in UK. D) Demand for USD. French exporter demand USD before he/she can purchase the service of American freighter. E) Supply for USD. Currency trader that feel value of USD will fall will sell USD in foreign exchange market. Hope that helps! sportandstock.blogspot.com
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