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Lecture

Homework 7 2010 Homework Problem Solutions

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Department
Economics
Course
ECON 231
Professor
Huang Hui
Semester
Winter

Description
Homework 7 2010 1 Draw a demand curve for pounds sterling in Canada On a separate set of axes draw the demand for Canadian dollars in the United Kingdom Be sure to label the axes carefullyCAD CADD D Q Q 2 If there are only two countries in the world then these demand curves are strongly related the demand for pounds sterling in Canada is the supply of Canadian dollars in the United Kingdom Noting that this supply curve will have a positive slope when the demand for pounds sterling in Canada is elastic and a negative slope when the demand for pounds sterling in Canada is inelastic draw the combined demand and supply diagram for pounds sterling in Canada Verify with this diagram that the price of foreign exchange the exchange rate FALLS as the Canadian dollar appreciates Hint shift the appropriate curve to reflect say an increase in the demand for Canadian export goods shift the appropriate curve to reflect say an increase in the demand for British exportsCADCADD DQ QIm
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