Economic

[pastyear]

hello, i have 3 questions want to ask you. It may difficult for you but you can answer it based on your knowledge plus why you choose the answer.Thanks

Q1. What will happen if a country allows its exchange rate to float freely?
      A. Foreign exchange reservrs will no longer be needed
      B. Inflation will follow the trend of inflation in the country's trading
          partners.
      C. The current account of the balance of payments will always balance
      D. The monetary authorities will lose their ability to contol the money
          supply

Q2. In the US in the summer of 2000 the Yen was $ 0.50. In the summer  
      of 2001 the Yen was $ 0.75. How was this change likely to have
      effect the US ?
      A. higher demand for imports
      B. higher imported inflation
      C. higher priced exports
      D. higher unemployment

Q3. The table shows the index of retail prices for a country on January  
      1st in successive years.
        Year ( Jan 1st)         Retail Price Index
             1990                        60
             1991                         80
             1992                        100
              1993                        125
             1994                          160
Which year has the highest rate of inflation?
    A  1990
    B  1991
    C  1992
    D  1993

[astarmathsandphysics]

1.a/c 2.c 3.a

[nid404]

1 should be C...2 should I'm confident be B and 3 one I'm not very sure
check your messages pastyear

[astarmathsandphysics]

Q2. In the US in the summer of 2000 the Yen was $ 0.50. In the summer 
      of 2001 the Yen was $ 0.75. How was this change likely to have
      effect the US ?
      A. higher demand for imports
      B. higher imported inflation
      C. higher priced exports
      D. higher unemployment

Q3. The table shows the index of retail prices for a country on January 
      1st in successive years.
        Year ( Jan 1st)         Retail Price Index
             1990                        60
             1991                         80
             1992                        100
              1993                        125
             1994                          160
Which year has the highest rate of inflation?
    A  1990
    B  1991
    C  1992
    D  1993

1.The Yen buys more dollars so the dollar has depreciated. This will mean exports are more expensev. This means inflation B

3. 1990 inlation20/60=33%
1991 inflation20/80=25%
1992 inflation 25/100=25%
1994 inlatin 35/125=28%
A

[nid404]

The exports in real terms may be expensive....you see something that cost 15yen before would still be 15yen.....just that the US dollars to be paid for the 15 yen would be more....so they r not priced higher in actual terms.....Imported inflation can occur through a depreciating AUD which makes it more expensive to purchase overseas goods.

Third one I wasn't sure anyways...I think you're right

[nid404]

@pastyear what r the answers?

[Nanavel]

Q1. What will happen if a country allows its exchange rate to float freely?
      A. Foreign exchange reservrs will no longer be needed
      B. Inflation will follow the trend of inflation in the country's trading
          partners.
      C. The current account of the balance of payments will always balance
      D. The monetary authorities will lose their ability to contol the money
          supply

They will face losses sometimes and other time they wont .however , the countries will find other country who's inflation rate is stable . I am not sure about this .


Q2. In the US in the summer of 2000 the Yen was $ 0.50. In the summer   
      of 2001 the Yen was $ 0.75. How was this change likely to have
      effect the US ?
      A. higher demand for imports
      B. higher imported inflation
      C. higher priced exports
      D. higher unemployment
As i see it , the US has imported from a higher inflation . but it could also be higher demand for the imports . I think the answer is B.


Q3. The table shows the index of retail prices for a country on January 
      1st in successive years.
        Year ( Jan 1st)         Retail Price Index
             1990                        60
             1991                         80
             1992                        100
              1993                        125
             1994                          160
Which year has the highest rate of inflation?
    A  1990
    B  1991
    C  1992
    D  1993
In this question , the inflation rate has been the same amount rising every year , but in the year 1993 it has increased by 5 more ... could be the Answer .



This is my first Time taking Economics in AS-level . I dont think i am good at it so far . Please Correct my answers if they are wrong . I like to know the Correct answers with reasons .

[astarmathsandphysics]

             1990                        60
             1991                         80
             1992                        100
              1993                        125
             1994                          160

this is how the inflation rate is worked out

For 1990:

For 1990 it would be

[nid404]

lol...pastyear just said the answer is B for all three

[Nanavel]

             1990                        60
             1991                         80
             1992                        100
              1993                        125
             1994                          160

this is how the inflation rate is worked out

For 1990:

For 1990 it would be

U are very helpful ..

[astarmathsandphysics]

I like it when you say that. It make me think that all the crimes commited everywhere, do, in a sense, help someone.