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1. Assume that the Central Bank of Canada pegged the Canadian Dollar to the Japanese Yen. Predict the likely impact of each of the following
1. Assume that the Central Bank of Canada pegged the Canadian Dollar to the Japanese Yen. Predict the likely impact of each of the following activities on Canada's Balance of Payments Accounts? That is will the account balances improve or worsen. Please state and briefly explain your answers? a. There is a decline in interest rates in Japan relative to interest rates in Canada. b. Japanese auto manufacturers import faux leather from Canada. c. Canadians purchase more audiovvisual equipment from Japanese manufacturers. Draw a graph to represent the foreign exchange market between the Canadian Dollar and the Japanese Yen. Draw a graph representing the demand and the supply of Yen. The horizontal axis of your graph should state the amount of Yen's bought and sold. and your vertical axis should measure the dollar price per Yen. Now predict the impact on the value of the Yen of 1 lei-(c). Please indicate on separate graphs whether the Yen will appreciate or depreciate. Note: Draw and label each graph on a separate sheet of paper, then scan them into PDF and upload into Canvas. You can equally take a photo of your graphs if you do not have access to a scanner. 3. Use the table below to answer the following questions: Foreign Transaction Amount in Millions of Dollars Official Transactions 20 Capital Outflow -520 Net Unilateral Transfers 65 Capital Inflow 480 Exports of Goods 1080 Exports of Services 490 Imports of Goods -585 Imports of Services -510 a. Calculate the Current Account Balance? b. Calculate the Capital Account Balance? c. Calculate the Balance of Trade?4. Use the table below to answer the questions that follow: Foreign Transaction Amount in Millions of Dollars Japanese purchases a Computer from the US 1,600.00 An American couple flies Japanese Airlines 4,000.00 An American purchases audio visual equipment from Japan 10,600.00 A Japanese business woman purchases stock in a leading US company 3,000.00 Japanese travellors purchase travel insurance from US Travel Agency 250.00 Compute the following: a. Changes in US Current Account? b. Changes in US Capital Account? c. Changes in US Balance of Trade?5. Is the following statement true or false? A strong dollar is a double-edged sword. Please state your position and support it using content from the text and outside sources. Remember to cite 1your outside sources
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