Question: Please help me out here Chapter 11 3. Suppose that the international demand and supply of Canadian dollars (in billions) is as shown in Table
Please help me out here
Chapter 11
3. Suppose that the international demand and supply of Canadian dollars (in billions) is as
shown in Table 3. This represents that total market for Canadian dollars.
a) Complete the following table:
Table 3
Value of
Cdn $ in
US $
$0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
Demand for Canadian Dollars
Exports
Factor
Foreign
of Goods income Investment
&
Earned
in Canada
Services Abroad
$110
109
108
107
106
105
104
103
102
101
100
$80
80
80
80
80
80
80
80
80
80
80
$180
175
170
165
160
155
150
145
140
135
130
Total
Supply of Canadian Dollars
Imports Foreign
Canadian
of Goods
factor
Investment
&
income
Abroad
Services
Paid
Abroad
$80
$66
$136
83
66
138
86
66
140
89
66
142
92
66
144
95
66
146
98
66
148
101
66
150
104
66
152
107
66
154
110
66
156
b) What is the equilibrium value of the Canadian dollar?
c) What is the value of its balance of trade?
d) What is its current account balance?
e) What is its capital account balance?
f) What is its overall balance of payments (current and capital accounts)?
Now, suppose that Canada fixes its exchange rate against the U.S. dollar at a value of
$1 Canadian equals $0.94 American.
g) What is the value of its balance of trade?
h) What is its current account balance?
i) What is its capital account balance?
j) What is the overall balance of payments (current and capital accounts)?
k) What is the balance on its official settlements account?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help