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Chapter 16 Macro (27 Econ)

Work It Out
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You must read each slide, and complete any questions on the slide, in sequence.

Suppose that you are given an opportunity to work in Tokyo over the summer as an English tutor, and you are provided with all living expenses and a 500,000-yen cash stipend, which you plan to save and bring home.

A. If the exchange rate is 120 yen per U.S. dollar, how much is your stipend worth in dollars if you exchanged your money right away? Round your answer to the nearest cent.
$
Incorrect! To convert yen into dollars, divide the number of yen by the conversion factor ($/¥). In other words, 500,000¥ ÷ $4,166.67. Or, simply (500,000¥) ÷ (120 ¥ per $1) = $4,166.67.
Correct! To convert yen into dollars, divide the number of yen by the conversion factor ($/¥). In other words, 500,000¥ ÷ $4,166.67. Or, simply (500,000¥) ÷ (120 ¥ per $1) = $4,166.67.
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      B. Suppose you predict that the exchange rate will change in the next few months to 110 yen per U.S. dollar. How much is your stipend worth in dollars if you exchanged your money later? Round your answer to the nearest cent. $
      Incorrect! You expect the dollar to weaken (one dollar will be worth fewer yen), so the yen will strengthen and be worth more dollars. 500,000¥ ÷ $4,545.45. Or, (50,000¥) ÷ (110¥ per $1) = $4,545.45.
      Correct! You expect the dollar to weaken (one dollar will be worth fewer yen), so the yen will strengthen and be worth more dollars. 500,000¥ ÷ $4,545.45. Or, (50,000¥) ÷ (110¥ per $1) = $4,545.45.
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          C. Would you receive more dollars if you exchanged the yen now or later? You would receive more dollars if you exchanged the yen __________.

          		A.
          		B.
          Incorrect! You will receive about $379, or 9 percent, more if the yen strengthens to 110 yen per dollar.
          Correct! You will receive about $379, or 9 percent, more if the yen strengthens to 110 yen per dollar.
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