Problem 1)
Assets Liabilities
Reserves-$1ml Deposit-$1ml
Problem 6)
A) Money multiplier 1/.10=10.0
B) Money supply:$25ml x 10.0= 250ml
Problem 7)
A) 1/.14= 7.143= 7.1
B) 25ml x 7.1= 177.5ml
Homework Week 3- Chapter 6
Problem 5)
Three years ago the U.S. dollar equivalent of a foreign currency was $1.2167. Today the U.S. dollar is equivalent of a foreign currency is $ 1.3310. Determine the percentage change of the euro between these two dates.
Percentage change = (1.3310 – 1.2167)/1.267 = .1143/1.2167 = .0939 or 9.39%
The foreign currency has appreciated by 9.4% relative to the U.S. dollar.
Problems 6)
If the U.S. dollar value of a British pound is $1.95 and a euro is $1.55, calculate the implied value of a euro in terms of a British pound.
Implied value of a euro = 1.55/1.95 = .7949 British pounds
Problem 9)
Assume that last year the Australian dollar was trading at $.5527, the Mexico peso at $.1102, and the United Kingdom pound was worth$1.4233. By this year the US dollar value of Australian dollar was $.7056, the Mexican peso was $.0867, and the British pound was $1.8203. Calculate the percentage appreciation or depreciation of each three currencies between last year and this year.
