1.Assume a U.S exporter sells USD3 million worth of wheat in Colombia.If the rate of exchange for Colombia peso (PHP1) is USD0.20 the wheat has a total value of 150 million pesos.

a.There are two ways the importer in Colombia may pay for the wheat It might a check for 150 million pesos drawn on its bank in Botoga and send it to the U.S. exporter. The American exporter would then sell the check to its bank in New Orleans and its demand deposit would increase by USD _____ million.This New Orleans bank now sells the check for 150 million pesos to corresponding bank ( a U.S. commercial banks that keeps an account in the Botogabank)The New Orleans bank's account in the corresponding bank increases by ______ million (dollars, pesos)____; and the corresponding bank's account in B0toga bank increases by ____ million (pesos, dollars)

b.The second way for the importer to pay for the wheat is to buy from its bank in Botoga a draft on a U.S. bank for USD3 million, pay for this draft by writing a check for 150 million pesos drawn on the Botoga bank, and send the draft to the U.S. exporter.

The U.S. exporter would then deposit the draft in its account in the New Orleans bank, and its demand deposit account will increase by USD_____ million.

The New Orleans bank collects the amount of the draft from the U.S. bank on which it is drawn through Federal Reserve Banks.Its account at the Fed increases by USD___ million; and the account of the bank on which the draft was drawn decreases by USD ____ million.

Regardless of the way used by the Colombian importer to pay for the wheat

a.he export of the wheat created a (demand for, supply of) ___ dollars and a demand for, supply of) ___ pesos.

b.The number of dollars owned by the U.S. exporter has (increased, decreased) ___ and the number of pesos owned by the Colombian importer has (increased, decreases)