Jump to content


Photo
- - - - -

BEC - Economy - Exchange Rate


  • Please log in to reply
1 reply to this topic

#1 cpa_punk

cpa_punk

    Newbie

  • CPAnet Member
  • Pip
  • 2 posts

Posted 17 June 2013 - 11:38 PM

Assuming US depreciated domestic currency and Japanese appreciated foreign currency.

1. what will the effect be on 'demand for US dollars" & "demand for domestic investment" - increase or decrease?
2. what will the effect be on 'demand for Japanese Yen" & "demand for foreign investment" - increase or decrease?
3. what will the effect be on 'US exports" to Japan import - increase or decrease?
4. what will the effect be on 'US goods & service in Japanese Market" - Advantage or Disadvantage?
5. what will the effect be on 'US goods & service in US Market" - Advantage or Disadvantage?
6. what will the effect be on 'Japanese goods & service in US Market" - Advantage or Disadvantage?
7. what will the effect be on 'Japanese goods & service in Japanese Market" - Advantage or Disadvantage?

I was preparing a summary of international trades with exchange rate effect. However, I was very confused of those elements above. Many thanx in advance

 



#2 Rec'dThis_219

Rec'dThis_219

    Member

  • CPAnet Member
  • PipPip
  • 15 posts

Posted 13 July 2013 - 03:41 PM

You posted this a while ago, but I'll take a stab at it.

 

  1. decrease
  2. increase
  3. increase
  4. advantage
  5. advantage
  6. disadvantage
  7. disadvantage

No idea if these are right. Here's my logic...Basically, for 1 and 2, because the Yen is higher, people will want more of that currency to maintain their purchasing power. For 3 through 7, because the USD has depreciated against the Yen, US goods and services are cheaper than Japanese ones. Within the US, they will want to spend more domestically because it would be more expensive to purchase Japanese goods. And similarly in Japan, they will want to import from the US because their money could buy more for less. 


FAR - 83

REG - 79

AUD - 79