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Assume that the spot exchange rate between U.S. Dollar and Chinese Yuan is $1 = 6.90 yuans 1. Compute the direct exchange rate between U.S.
Assume that the spot exchange rate between U.S. Dollar and Chinese Yuan is $1 = 6.90 yuans 1. Compute the direct exchange rate between U.S. $ and Chinese yuan (i.e., value of 1 yuan in $). 2. At this exchange rate, how much would a HP laptop which costs $_ (choose a reasonable number, other than $1,000) in Houston cost in Beijing? (Ignore the costs of shipping and handling and any tarift) 3. Assume that on pressure from the Trump administration, China agrees to let yuan appreciate by 15%. What is the new exchange rate (direct) after the appreciation? 4. At this exchange rate, how much would the HP laptop in #2 above cost in Beijing? 5. Assume that a pair of sneaker costs 300 yuans in Beijing. How much would it cost in U.S. S before the appreciation of yuan? 6. How much would the pair of sneaker cost in U.S. S after the appreciation of Yuan? 7. What is likely to happen to U.S. exports to China when Yuan appreciates? Why? 8. What is likely to happen to U.S. imports from China when Yuan appreciates? Why
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