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2. Ch.20: Supply & Demand for foreign currency. (5pts.) The graph shows the market for British pounds. Assume the government in Great Britain has decided
2. Ch.20: Supply & Demand for foreign currency. (5pts.) The graph shows the market for British pounds. Assume the government in Great Britain has decided to decrease the supply of pounds circulating in the economy. Draw the appropriate line to show how that would affect the graph. 3. Ch.20: Purchasing Power Parity. Fill in the correct answers. Please show your work only partial credit will be given 1f no work is shown. Round to 2 decimal points for all answers. (Spts.) i Suppose Tran studies in Vietnam. He buys a bowl of pho (noodle soup) for 250 baht. Tran remembers paying $8 for a similar bowl of pho before he left the United States. If purchasing power parity held exactly, the exchange rate would be baht per dollar. ii. Suppose that the actual exchange rate was 34.38 baht per dollar. Therefore, the dollar would be , and the dollar would Choose one: a) overvalued: appreciate b) undervalued; depreciate ) overvalued; depreciate d) undervalued; appreciate 4. Ch.20: Balance of Payments. Fill in blanks with the correct answer choice (Spts) Determine whether each of the following belongs in the current account or the capital account, and if they show up as positive or negative: i Exports of goods and services belong inthe capital account / current account and they would show up as _ positive / negative i Imports of goods and services belong in the capital account / current account, and they would show up as _ positive / negative i, US financial assets that were purchased by foreign entities belong in the capital account / current account, and they would show up as ___ positive / negative
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