QUESTION 1 20 points Save Answer Consider the exchange rate between U.S. Dollar and New Zealand Dollar: USD/NZD. If the exchange rate changed from 1.40 to 1.47, and inflation was 6.2% in the U.S. and 4.9% in New Zealand, then the real exchange rate increased by percent. Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol ".". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99". QUESTION 2 20 points Save Answer Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. If the supply curve for USD shifted from 100 + e, to 104 + e, bin dollars per week and the demand curve shifted from 140-e to 142-e, bin dollars per week, then the exchange rate changed by percent. Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol ".". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99". QUESTION 3 20 points Save Answer Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. Initially, the supply curve for USD is 100 + e, bin dollars per week and the demand curve is 140-e, bin dollars per week. There is a financial crisis in Mexico and the government fears that it may lead to capital outflows that would make the crisis even worse. They decide that if Mexican Peso depreciates by more than 20% the central bank will step in and fix the exchange rate. As the crisis unfolds the demandQuestion Completion Status: QUESTION 3 20 points Save Answer Consider the exchange rate between U.S. Dollar and Mexican Peso: USD/MXN. Initially, the supply curve for USD is 100 + e, bin dollars per week and the demand curve is 140- e, bin dollars per week. There is a financial crisis in Mexico and the government fears that it may lead to capital outflows that would make the crisis even worse. They decide that if Mexican Peso depreciates by more than 20%, the central bank will step in and fix the exchange rate. As the crisis unfolds the demand for the U.S. dollars increases to 142-e, and the supply of dollars falls to 99 + e . How should the central bank of Mexico react to this change? O A. start selling U.S. dollars to support the exchange rate O B. start buying U.S. dollars to support the exchange rate O C. reduce money supply in the economy O D. do nothing QUESTION 4 20 points Save Answer Using information from problem 3, suppose that the financial crisis worsens and now the supply curve for USD is 91 + e, bin dollars per week and the demand curve is 155-e, bin dollars per week. The central bank still commits to its pledge to support the exchange rate if Peso depreciates by over 20% from the original level (more specifically, in this case the fixed exchange rate will be 20% higher than the original level). To maintain the fixed exchange rate, the central bank will have to spend billion dollars of foreign exchange reserves per week. Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol ".". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99". QUESTION 5 20 points Save AnswerQUESTION 4 20 points Save Answer Using information from problem 3, suppose that the financial crisis worsens and now the supply curve for USD is 91 + e, bin dollars per week and the demand curve is 155- e, bin dollars per week. The central bank still commits to its pledge to support the exchange rate if Peso depreciates by over 20% from the original level (more specifically, in this case the fixed exchange rate will be 20% higher than the original level). To maintain the fixed exchange rate, the central bank will have to spend billion dollars of foreign exchange reserves per week. Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol ".". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99". QUESTION 5 20 points Save Answer Using information from problems 3 and 4, suppose that the central bank of Mexico has 200 bin dollars of foreign reserves just before the financial crisis began. If the central bank wants to keep the exchange rate at the level described in problem 4, it can do so for weeks before it runs out of reserves (provided supply and demand curves do not change). Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol ".". If your answer is a negative number, type a dash in front of your answer, i.e, "-999.99"