Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Macroeconomics problems - Essay Example

Comments (0) Cite this document
Name Professor Course Date Macroeconomics SECTION ONE: a) Wanda, in America, wants to buy a bottle of French wine. The wine costs 1000 euro’s. Pierre, a Frenchman, wants to buy an American computer that costs $2000. The exchange rate is ‘1 euro=$1.08’…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.1% of users find it useful
Macroeconomics problems
Read TextPreview

Extract of sample "Macroeconomics problems"

Download file to see previous pages b) Assume the exchange rate changes. Now, ‘1 euro=$1.20’. Showing all work, what does Wanda pay for the wine? What does Pierre pay for the computer? In this case, there is a change in the individual rates of exchange between the euro and the dollar. Currently, ‘1 euro=$1.20’ hence Wanda will spend (1000*1.20) 1200 dollars on a bottle of French wine. On the other hand, Pierre will spend (2000/1.20) 1,666.67 Euros on the purchase of an American computer. c) Which currency appreciated? Explain. Taking a closer look at the two currencies, it is evident that the Euro appreciated against the dollar. According to macroeconomic theory, appreciation of a currency refers to the increase in the value of one international currency against the other in the sense that the appreciating currency is able to purchase more of the other currency (Krugman & Wells 100). In the above mentioned case, the dollar and the Euro are international currency that had an initial exchange rate of ‘1 euro=$1.08.’ However, there was a change in the exchange rates and the current rate stands at ‘1 euro=1.20.’ This means that the dollar has to fetch more additional units to purchase a single unit of a Euro. This is evident in the case of an American purchasing a bottle of wine and has to pay an initial price of 1080 dollars. Since the euro has appreciated, the American will have to pay a higher price of 1200 for the same bottle of French wine. Consumers using the Euro have a higher purchasing power compared to those using the dollar. SECTION TWO: a) In this section, you will set up a balance of payments table. Please read chapter 26. A BOP has three accounts. You will need to place each item in its proper account and have a dollar value for the total of each account. The table will be in billions. Please indicate, plus or minus, for each number. Credits ‘000,000 ($) Debits ‘000,000 ($) A. Current Account (1) Exports (2) Imports (3) Net Transfers (4) Net Interest Income Balance B. Capital Account (5) Foreign Investments in the U.S. (6) U.S. Investments Abroad Balance (7) Statistical Discrepancies Overall Balance C. Official Reserve Account +2,421 +150 +220 +1150 +250 +30 -2,971 -180 -900 -40 -30 b) What does the official settlements number indicate? Be precise in explaining this. Based on the above table, the official settlements number is -30 and this indicates that the US has an increase in its foreign reserves and that there is also a decrease in the dollar reserves held by foreign central banks (Krugman & Wells 113). The decrease in dollar reserves among foreign central banks count as debits in the Balance Of Payments account. SECTION THREE: a) Under what conditions would the Fed sell government securities? The Fed would sell government securities under conditions such as inflation, employment and national output. Under such cases, the Fed does not have control but can only influence such conditions to its favor. The Fed can create an effect on such conditions by increasing or reducing the short term rate interest especially through open market operations. Some of the government securities used during open market operations includes treasury bills, bonds and notes (Krugman & Wells 119). The control of money supply offers tangible solutions to the conditions mentioned above. When the Fed is targeting to increase the supply of money in the economy, there will be the purchase of securities. On the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Macroeconomics problems Essay Example | Topics and Well Written Essays - 2000 words”, n.d.)
Retrieved from
(Macroeconomics Problems Essay Example | Topics and Well Written Essays - 2000 Words)
“Macroeconomics Problems Essay Example | Topics and Well Written Essays - 2000 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Macroeconomics problems

Problems in Australian Politics and How to Solve Them

Wages that include overtime allowances and travel allowances for the staff of Members of Parliament reveal a sudden increase just before the elections and this reveals that they are being utilized as a part of the election campaign (McLennan, 2004).

Estimating corruption is always difficult because people never reveal the facts of corruption that they are involved in. Politicizing public service often becomes a major problem and this reprehensible practice was introduced during the regime of the Labour party government and was continued by the Coalition government. Due to this, the public servants have slowly commenced to divest themselves of accountability towards parliament or to the code of conduct (McLennan, 2004).<...
6 Pages(1500 words)Assignment

Prescription Drug Abuse - Problems and Solutions

On the one side is to need to make available drugs of varying nature to the patients, who require is, and on the other is the exercise of control measures to ensure that these patients do not abuse these drugs, or make it available to others for drug abuse. In a sense, physicians may well claim that their role in controlling or preventing drug abuse is limited to their exercising restraint in the prescribing the drugs. It is the pharmacists that need to ensure that these prescriptions are not abused. This argument of medical professionals only restates the importance of pharmacists in the control and prevention of prescription drug abuse.

Wesson and Smith (1990), define prescription drug abuse as “a nebulous const...
7 Pages(1750 words)Coursework

Emergency Service Personnel and the Impact of Stress and Cardiac Related Problems on Their Jobs

Due to the nature of their jobs, personnel working in these departments are prone to many occupational hazards, the most important of which is stress. This could be due to their own living environment, their protective gear, their officers and leaders, current management styles, co-workers, and the stress of leaving their families and loved ones alone during natural and man-made disasters. Many of them are required to withstand horrendous physical and psychological assaults as they perform their duty. They have to work in the midst of civil unrest, urban terrorism, structural collapse, earthquakes, and hurricanes. They need to be action-oriented and need to be in control. Those people who choose a career in this path, with all its...
10 Pages(2500 words)Term Paper

Why Firms Outsource HR Activities and What Are the Potential Problems and Benefits of Outsourcing HR Activities

With minor changes here and there, these companies have taken giant strides in their respective human resources fields and thus made a mark for their own selves. It is a common phenomenon that a business can move away from a stand of firmness and consistency to one of a comprehensive weak one as the same is willing to grab hold of the varied means present within the market as well as the driving factors.

The United Kingdom has witnessed a lot of change within the economical shifts of late. What this echoes is the fact that people and more so the companies have started to move out of the UK in the wake of achieving different goals for their own selves and in a quest to achieve what they have not been able to, in the yes...
6 Pages(1500 words)Term Paper

The Problems and the Management at Classic Airlines

The issues discussed in Table 1, are framed in accordance with the situations discussed in the case of Classic Airlines. The organization is facing problems on account of steadily declining share prices as well as a simultaneous increase in the fuel prices and labor costs. This is a serious issue faced by management. Also the customer satisfaction is on a decline leading to further complications in the given scenario. The management is now faced with a dilemma of resorting to cost-cutting and has contemplated the implementation of automated customer care systems but the customers have expressed desire of availing the facility of being able to talk to a real person instead. This is further adding to the management’s troubles....
8 Pages(2000 words)Term Paper

Ryanairs Staff Treatment and Motivation Problems

To prove that not all of the public accusations against the way Ryanair handles its employees is true; a combination of qualitative and quantitative research methods will be utilized using research survey questionnaires. Aiming to strengthen the research survey results, an interview with Ryanair’s human resource assistant manager, customer service supervisor, duty manager, and duty controller was conducted to enable the researcher to gain a better insight with regards to employees’ views on labor unions and the type of motivational strategies used by the company.
Ryanair is an Irish low-cost airline with its head office in Dublin and its main operational base at London Stansted Airport. It is Europes major low-cos...
43 Pages(10750 words)Dissertation

Macroeconomics and Trade Policys

Keynes argued that prices and wages do not determine the level of employment, as many classical economists suggested, but instead the level of aggregate demand for goods and services (Case & Fair 683). Keynes realized as well during the Great Depression that the government could intervene in the economy to attain specific employment and output goals by either increasing or decreasing taxes and government spending.

For example, raising taxes will decrease the disposable income of households and thus effectively decreasing consumption. When the government decreases consumption, the household demand for goods and services decreases thus it would only seem reasonable that the amount of output that the economy would also...
7 Pages(1750 words)Article

What Is Macroeconomics

While microeconomics is concerned with the factors underpinning the economic life of individual entities like families and small businesses, macroeconomics looks into the various elements that move or determine the economy in its entirety or what some call an aggregate economy. Macroeconomics is useful because it allows a predictive view of how market forces affect the economy and advises governments appropriate economic policies and gives private individuals and business entities a glimpse of what the future holds economically.
The term macroeconomics did not exist prior to the Great Depression but there was a collective set of theories that were used to study the various workings that influenced the aggregate economy. Econo...
8 Pages(2000 words)Assignment

Identification of problems in the Criminal Justice System of the US

They are on trial and will be dealt with fairly. These laws ensure that no one, even if he or she has committed a crime is abused or punished cruelly.
Following the history of civilization like in china, we see the traces of systems for Criminal justice in order to provide safety for the citizens. Evolving through the years laws have been modified and changed to form the system that we know today.
 From its start, the “U.S. criminal justice system” has advocated the idea of “checks and balances”. To avoid dictatorial rule, the people who founded this system in such a way that one person was not given control or authority completely to punish the criminals. The idea of assigning a ‘jury...
6 Pages(1500 words)Assignment

People in Society and Their Problems

Coming to question 4, the average answer from participants is 2.7, which means that they are leaning more towards agreeing that marriage is important for a strong and enduring relationship. 53.4% of males agree with the fact that marriage is important for a strong and enduring relationship while 66.1% of females agree with this question.
Beginning with question 5, 5% of males agree on this question. On the other hand, 50% of women agree. This, therefore, means that more women (45% more) agree on this question compared to men. It may also be a pointer to the sensitive and caring nature of women since more of them believe that they are responsible for their spouses even up to the point of making decisions for them. Question 6 a...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Macroeconomics problems for FREE!

Contact Us