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Which of the following is NOT the method of exchange rate?

Economics

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Answer

D

Step-by-step solution

6 steps

Part 6

Which of the following is NOT the method of exchange rate?
The correct option is D.

  • Floating exchange rates, managed float, and fixed exchange rates are all recognized systems for determining exchange rates. "Internal exchange rate" is not a standard method of exchange rate determination in international economics. D. Internal exchange rate\boxed{\text{D. Internal exchange rate}}

For Questions 7 to 9, refer to the following information.
Joe imported some computers worth K50 000 in 2011.
The exchange rate was K1=A$0.50. In 2015, the same amount of computer was bought for K60 000 from Australia.

Part 7· 2 steps

The situation above shows that
The correct option is D.

  1. Compare the cost of imports over time.

    In 2011, K50,000 was needed to buy the computers. In 2015, K60,000 was needed to buy the same amount of computers. This means it took more Kina to purchase the same foreign goods.

  2. Determine the implication for the Kina's value.

    When more domestic currency is required to buy the same amount of foreign goods, the domestic currency has lost value relative to the foreign currency. This is known as depreciation.
    D. PNG Kina has depreciated.\boxed{\text{D. PNG Kina has depreciated.}}

Part 8· 2 steps

How much was paid in Australian Dollar in 2011?
The correct option is A.

  1. Identify the Kina amount and the exchange rate for 2011.

    Amount in Kina = K50,000
    Exchange rate = K1 = A$0.50

  2. Convert the Kina amount to Australian Dollars.

    Amount in AUD=Amount in Kina×A$K\text{Amount in AUD} = \text{Amount in Kina} \times \frac{\text{A\$}}{\text{K}} Amount in AUD=K50,000×A$0.50/K1=A$25,000\text{Amount in AUD} = \text{K50,000} \times \text{A\$0.50/K1} = \text{A\$25,000} \boxed{\text{A. A\ 25 000.}}$

Part 9· 2 steps

If the exchange rate was K1=A$0.30 in 2015, how much Australian Dollar did Joe pay in 2015? The correct option is B.

  1. Identify the Kina amount paid in 2015 and the specified exchange rate.

    Amount in Kina = K60,000
    Exchange rate = K1 = A$0.30

  2. Convert the Kina amount to Australian Dollars using the given exchange rate.

    Amount in AUD=Amount in Kina×A$K\text{Amount in AUD} = \text{Amount in Kina} \times \frac{\text{A\$}}{\text{K}} Amount in AUD=K60,000×A$0.30/K1=A$18,000\text{Amount in AUD} = \text{K60,000} \times \text{A\$0.30/K1} = \text{A\$18,000} \boxed{\text{B. A\18 000.}}$

Part 10

What is globalization with relation to economics?
It is the process of
The correct option is A.

  • Economic globalization refers to the increasing interdependence of world economies through cross-border trade, capital flows, and the spread of technology. This is best described as connecting internal markets to the global economy. A. connecting internal markets to global economy.\boxed{\text{A. connecting internal markets to global economy.}}
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