Question

Please show all calcualtions if applicable. Please explain concepts in detail. If using excel, please show data.

Practice #13

The GBPUSD exchange rate was $1.3300 per pound on December 1, 2019. The GBPUSD exchange rate today is $1.2500 per pound. In the past 6 months, has the value of the British pound (relative to the U.S. dollar) increased in value, decreased in value, or remained the same?

Practice #14

It is well-documented that the United States consistently runs sizable current account deficits. What are the long-term risks associated with running current account deficits?

Answer 1

13. It can be said that the value of great Britain pounds has decreased in respect to United States dollars because earlier The great Britain pound was equivalent to $1.33 whereas now it is just equivalent toS 1.25.

it can be said that the value of the great Britain pound has diminished in respect to dollars

14.there are various long term risk associated with running current account deficit because it will lead to depreciation in the value of the domestic currency and it can also lead to the value of the foreign reserves going down and it can also leads to the reputation of country on the part of the payment of its debt repayment has been substantially reduced and ratings of its sovereign security will go down.