Question

5. How does an increase in the value of the Egyptian pound affect American businesses in Egypt?

6. When the dollar is worth more in relation to currencies of other countries, are you more likely to buy American-made or foreign-made jeans? Are U.S. companies that manufacture jeans happier when the dollar is strong or when it is weak? What about an American company that is in the business of importing jeans into the United States?

7. "In a world without information and transaction costs, financial intermediaries would not exist." Is this statement true, false, or uncertain? Explain your answer.

8. Would you be willing to give up your checkbook and instead use an electronic means of payment if it were made available? Why or why not?

9. What is your opinion in the new initiative of the central bank related to the electronic payments?

10. In Venezuela, a country that was undergoing a rapid inflation at 2019, many transactions were conducted in dollars rather than in the domestic currency. Why?

11. You have just won $20 million in the state lottery, which promises to pay you $1 million (tax free) every year for the next 20 years. Have you really won $20 million?

Answer 1

Ans-5) An appreciation of currency i.e. increase in the value of domestic currency (here pound) in relation to other country's currency (here American Dollar) will make the imports more cheaper in Egypt. Therefore, the American business will profit from exports to Egypt i.e. Egypt will import more from America as it is now cheaper.

The appreciation of egyptian pound will also raise interest rates in the country providing better returns to the investors . The American business personnel would now invest more in Egypt due to better returns .