国际经济学第九版英文课后答案-第16单元

1、 thInternational Economics 9 EditionInstructors ManualThe busi*CHAPTER 16(Core Chapter)THE PRICE ADJUSTMENT MECHANISM WITH FLEXIBLEAND FIXED EXCHANGE RATESOUTLINE16.1 Introduction16.2 Adjustment with Flexible Exchange Rates16.2a Balance-of-Payments Adjustment with Exchange Rate Changes16.2b Derivati

2、on of the Demand Curve for Foreign Exchange16.2c Derivation of the Supply Curve for Foreign Exchange16.3 Effect of Exchange Rate Changes on Domestic Prices and the Terms of TradeCase Study 16-1: Currency Depreciation and Inflation in Developing Countries16.4 Stability of Foreign Exchange Markets16.4

3、a Stable and Unstable Foreign Exchange Markets16.4b The Marshall-Lerner Condition16.5 Elasticities in the Real World16.5a Elasticity Estimates16.5b The J-Curve Effect and Revised Elasticity EstimatesCase Study 16-2: Estimated Price Elasticities in International TradeCase Study 16-3: Effective Exchan

4、ge Rate of the Dollar and the U.S. CurrentAccount BalanceCase Study 16-4: Dollar Depreciation and the U.S. Current Account BalanceCase Study 16-5: Exchange Rates and Current Account Balances During theEuropean Financial Crisis of the Early 1990s16.5c Currency Pass-ThroughCase Study 16-6: Exchange Ra

5、te Pass-Through to Import Prices in IndustrialCountries16.6 Adjustment Under the Gold Standard16.6a The Gold Standard16.6b The Price-Specie-Flow MechanismAppendix:A16.1 The Effect of Exchange Rate Changes on Domestic PricesA16.2 Derivation of the Marshall-Lerner ConditionA16.3 Stability of Foreign E

6、xchange Markets Once AgainA16.4 Derivation of the Gold Points and Gold Flows Under the GoldStandard(94923157.doc)16-1Dominick Salvatore thInternational Economics 9 EditionInstructors ManualKey TermsDevaluationDutch diseaseGold standardMint parityStable foreign exchange marketGold export pointUnstabl

7、e foreign exchange market Gold import pointMarshall-Lerner conditionElasticity pessimismIdentification problemJ-curve effectPrice-specie flow mechanismQuantity theory of moneyRules of the game of the gold standardCurrency boardPass-through effectLecture Guide:1.2.This is an important and challenging

8、 core chapter.I would cover sections 1 and 2 in the first lecture. My experience is that studentsfind particularly difficult the derivation of the demand and supply curves forforeign exchange. Therefore, I would explain the material in sections 16.2a and16.2b very carefully and slowly. I would also

9、assign problems 1 to 6.3.4.I would cover sections 3 and 4 in the second lecture and pay special attention tosection 16.4b. I would also assign problems 7 to 9.In the third lecture, I would present sections 5 and 6 and assign problems 10 to 15.Answer to Problems:1.2.3.The nations demand curve for imp

10、orts is derived by the horizontal distance of thenations supply curve from the nations demand curve of the tradable commodityat each price below the equilibrium level of the tradable commodity. See Figure1 on the next page.The nations supply curve for exports is derived by the horizontal distance of

11、 thenations demand curve from the nations supply curve of the tradable commodityat each price above the equilibrium level of the tradable commodity. See Figure2.A depreciation of the dollar shifts DM downward vertically and leaves PM (inpounds) and the quantity of imports unchanged (see Figure 3).(9

12、4923157.doc)16-2Dominick Salvatore thInternational Economics 9 EditionInstructors Manual(94923157.doc)16-3Dominick Salvatore thInternational Economics 9 EditionInstructors Manual4.5.6.7.A depreciation of the dollar shifts SX downward vertically and leaves PX (inpounds) and the quantity of exports un

13、changed (see Figure 4).A depreciation of the dollar reduces the quantity demanded of pounds by lesswhen DM is inelastic (point B in Figure 5) than when DM is elastic (point C).A depreciation of the pound increases the quantity supplied of pounds by lesswhen SX is inelastic (point B in Figure 6) than

14、 when SX is elastic (point C).SM is infinitely elastic for a small nation because a small nation can demand anyquantity of imports without affecting its price; similarly, DX is infinitely elasticbecause a small nation can sell any amount of its export good without having toreduce its price.8.9.The b

15、alance of payments of a small nation always improves with a depreciation ordevaluation of its currency because the small nations quantity demanded ofpounds always falls (unless DM is vertical) and the quantity supplied of poundsalways rises.See the two panels of Figure 7 on page 156.Panel A shows th

16、at a devaluation or depreciation of the nations currency resultsin downward shift in DM and, by itself, results in a reduction in the quantitydemanded of the foreign currency by the nation and thus to an improvement in thenations balance of payments (trade).Panel B shows that a devaluation or deprec

17、iation of the nations currency resultsin a downward shift in SX which, by itself, leads to a net reduction in the quantityof foreign currency earned by the nation through exports and to a worsening ofthe nations balance of payments (trade).Since the reduction in the foreign exchange earnings of the

18、nation exceeds thereduction in the demand for foreign currency by the nation (compare the shadedareas in the two panels of Figure 7), the nations balance of payments (trade)worsens as a result of the devaluation or depreciation, indicating an unstableforeign exchange market.(94923157.doc)16-4Dominic

19、k Salvatore thInternational Economics 9 EditionInstructors Manual(94923157.doc)16-5Dominick Salvatore thInternational Economics 9 EditionInstructors Manual(94923157.doc)16-6Dominick Salvatore thInternational Economics 9 EditionInstructors Manual10.Although trade need not be balanced bilaterally or e

20、ven multilaterally (withinternational private capital flows), the United States can be said to have a tradedeficit with Japan because of the size of this trade deficit and the fact that it haspersisted for such a long time despite the sharp depreciation of the dollar withrespect to the yen during th

21、e past decade.11.Even though the U.S. trade deficit with Japan has not been reduced as a result ofthe sharp depreciation of the dollar with respect to the yen during the past 10years, we cannot conclude that the trade or elasticity approach to balance ofpayments adjustment does not work. The U.S. tr

22、ade deficit with Japan seem torespond only with a lag of several years to exchange-rate changes. In additionother forces may have overwhelmed the effect of a depreciation of the dollar withrespect to the yen. For example, if Japan is in the contractionary part of thebusiness cycle while the United S

23、tates at an expansionary part of the cycle, theU.S. trade deficit with Japan may increase because Japan demands fewerAmerican products while the United States demands more Japanese products,despite the depreciation of the dollar vis-avis the yen.12.13.Since $35=1 ounce of gold = 14, the dollar price

24、 of or the exchange rate(R=$/) is fixed at $35/14=$2.50. Thus, fixing the price of gold in terms ofnational currencies under the gold standard establishes a fixed relationship orexchange rate between any two currencies. This is the mint parity.Since to ship $2.50 worth of gold from New York to Londo

25、n costs 1% or 2.5c, theU.S. gold export point or upper limit of the exchange rate equals $2.50 plus 2.5cor $2.525. The reason for this is that no U.S. resident would pay more than $2.525to obtain 1, since he could buy $2.50 worth of gold from the U.S. treasury, shipit to the United Kingdom at a cost

26、 of 2.5c and sell it to the U.K. treasury for 1.Thus, under the gold standard, the exchange rate of the pound can never riseabove (and the dollar depreciate past) the U.S. gold export point of $2.525.14.Similarly, the exchange rate can never fall below (and the dollar appreciate past)the U.S. gold i

27、mport point of $2.475. The reason for this is that no U.S. residentwould accept less than $2.475 for each pound sold, since he could always buy apound worth of gold from the U.K. treasury at the fixed price, import this goldinto the United States at a cost of 2.5c, and resell it to the U.S. treasury

28、 for $2.50.Thus, the U.S. resident can get pounds at $2.475 ($2.50 minus 2.5c) and wouldnot accept less in selling them. Note that the shipping cost of gold includes notonly the transportation cost but also all other handling charges, insurance, and theinterest foregone while the gold is in transit.

29、App. 1 N=($PX/$PM)=($4/$2)=2 or 200%.The results is the same as that obtained in section 16.2b, where PX and PM wereboth measured in pounds.(94923157.doc)16-7Dominick Salvatore thInternational Economics 9 EditionInstructors ManualApp. 2 A depreciation or devaluation of a small countrys national curr

30、ency is not likelyto affect its terms of trade because DM and SX are infinitely elastic or horizontalfor a small nation, and a depreciation or a devaluation of its currency would leavePM and PX unchanged when measured in terms of either the domestic or theforeign currency.App.3 The fact that an unst

31、able foreign exchange market eventually becomes stable forlarge enough exchange rate changes is not of practical importance because suchlarge changes in exchange rates would be very inflationary and are usually outsidemost nations experience of actual exchange rate changes.App. 4 If D shifts to D an

32、d S shifts to S in Figure 16-10, the exchange rate Rwould be R=$4.86/1 and the balance of payments would be in equilibrium bothunder the gold standard and under a flexible exchange rate system.Multiple-choice Questions:1. The more elastic is a nations demand and supply of foreign exchange the:a. lar

33、ger is the devaluation or depreciation required to correct a deficit of a given size inthe nations balance of payments*b. smaller is the devaluation or depreciation required to correct a deficit of asize in the nations balance of paymentsgivenc. less feasible is a flexible exchange rate systemd. les

34、s feasible is a devaluation as a policy to correct a deficit in the nationsbalance of payments2. A nations demand curve for foreign exchange is derived from the:a. foreign demand curve for the nations exportsb. nations supply curve of exports*c. domestic demand curve for imports and the foreign supp

35、ly curve for the nationsimportsd. foreign demand curve and the domestic supply curve for the nations exports3. A depreciation of a nations currency shifts:a. down its supply curve of imports in terms of the foreign currencyb. up its demand curve of imports in terms of the foreign currency*c. down it

36、s demand curve of imports in terms of the foreign currencyd. down its demand curve of imports in terms of the domestic currency(94923157.doc)16-8Dominick Salvatore thInternational Economics 9 EditionInstructors Manual4. When a nations demand curve for imports in terms of the foreign currency is vert

37、ical:*a. the nations demand curve for the foreign currency has zero elasticityb. the nations demand for the currency is elasticc. the nations supply of the currency is verticald. the other nations demand for the nations currency has zero elasticity5. A depreciation of a nations currency shifts:a. do

38、wn its supply curve of exports in terms of the domestic currency*b. down its supply curve of exports in terms of the foreign currencyc. down its demand curve for exports in terms of the foreign currencyd. up its supply curve of imports in terms of the foreign currency6. When a nations demand curve f

39、or exports in terms of the foreign currency is inelastic:*a. the nations supply curve of the foreign currency is negatively inclinedb. the nations supply curve of the foreign currency is verticalc. the nations demand curve for the foreign currency is negatively inclinedd. the other nations supply cu

40、rve of the nations currency is negatively inclined7. For a small nation:a. the foreign supply of exports is horizontalb. the domestic demand for imports is horizontal*c. the foreign demand for its exports is horizontald. the foreign supply of exports is vertical8. A depreciation of the nations curre

41、ncy causes its terms of trade to:a. deteriorateb. improvec. remain unchanged*d. any of the above9. A depreciation of a nations currency is:*a. inflationary for the nationb. deflationary for the nationc. deflationary for the trade partnerd. any of the above10. The foreign exchange market is stable wh

42、en:(94923157.doc)16-9Dominick Salvatore thInternational Economics 9 EditionInstructors Manuala. The demand curve of foreign exchange is negatively inclined and the supply curveof foreign exchange is positively inclinedb. the supply curve of foreign exchange is negatively inclined and less elastic th

43、an thedemand curvec. the sum of the absolute values of the elasticity of the nations demand of imports andthe foreign demand for the nations exports is greater than one*d. all of the above11. The United States has a trade problem with Japan because the U.S. trade deficit withJapan:a. is very largeb. has persisted for a long timec. did not seem to decline when the dollar depreciated sharply with respect to the yen*d. all of the above12. The mint parity refers to the:a. gold export pointb. gold import pointc. equilibrium exchange rate*d. ratio of the price of a un