Scribd
Upload
91 views7 pages

Week 1 Tutorial Problems

1. Australia had a goods balance deficit of -$4,813 million in 2000, $1,786 million surplus in 2001, and -$5,431 million deficit in 2002. 2. In 2000, Australia had a $289 million services balance surplus, -$259 million deficit in 2001, and -$201 million deficit in 2002. 3. Australia's current account balance was a deficit of -$15,103 million in 2000, -$8,721 million in 2001, and -$17,385 million in 2002.

Uploaded by

WOP INVEST
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
91 views7 pages

Week 1 Tutorial Problems

1. Australia had a goods balance deficit of -$4,813 million in 2000, $1,786 million surplus in 2001, and -$5,431 million deficit in 2002. 2. In 2000, Australia had a $289 million services balance surplus, -$259 million deficit in 2001, and -$201 million deficit in 2002. 3. Australia's current account balance was a deficit of -$15,103 million in 2000, -$8,721 million in 2001, and -$17,385 million in 2002.

Uploaded by

WOP INVEST
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 7

Problem 2.

1 Albert’s Trip to Canada

Albert visits Toronto and buys 1.74 Canadian dollars (CAD) for one British
pound (GBP). When he returns home to the United Kingdom, he converts
CAD1 into GBP0.59. Is the new exchange rate favorable or unfavorable?

Assumptions Values

Buy Canadian dollars for (CAD/£) 1.7400


Which is equivalent, the reciprocal (£/CAD) £0.5747

Buy back pounds for (£/CAD) £0.5900


Which is equivalent, the reciprocal (CAD/£) 1.6949

It is better to convert back his remaining Canadian dollars to GBP when he


reaches back home.
Problem 2.4 Brent Oil

In 2015, one barrel of Brent oil traded for GBP42.5 and South Africa rands (ZAR) 790. What is
the exchange rate between the pound and the rand? How would the exchange rate change if the oil
price jumps to GBP50 per barrel (assuming no change in the price in South Africa)?

Brent Oil
Assumptions Values What If
Price of an ounce of gold in GBP (£/barrel) £42.50 £50.00
Price of an ounce of gold in S. African rands (ZAR/barrel) ZAR 790.00 ZAR 790.00

What is the implied ₤/ZAR exchange rate? £0.0538 £0.0633


(GBP price of an ounce / ZAR price of an ounce)
Problem 2.6 Online Shopping

Tamara lives in Egypt and has placed a bundle of items in her Amazon.co.uk account
basket. She has the choice to pay in Egyptian pounds (EGP 1, 844) or in GBP
(151.17). What is the exchange rate between both currencies? In which currency
should she pay?

Assumptions Values
Egyptian pound price of basket (EGP) 1,844.00
British pound price of basket (GBP) 151.17

Implied exchange rate (EGP/£) 12.1982

Many emerging markets that suffer from foreign exchange shortages have more than
one exchange rate . The official exchange rate is the one officially transacted by the
banking system. However, there is usually a parallel foreign exchange market where
the foreign currency is usually cheaper. Tamara should weigh both of these rates
before making her decision.
Australia's Current Account

Use the following balance of payments data for Australia from the IMF to answer Problems 3.1–3.4.

3.1 What is Australia's balance on goods?


3.2 What is Australia's balance on services?
3.3 What is Australia's balance on goods and services?
3.4 What is Australia's current account balance?

Assumptions (millions of US d 2000 2001 2002

Goods: exports 64,052 63,676 65,099


Goods: imports -68,865 -61,890 -70,530
Balance on goods -4,813 1,786 -5,431

Services: credit 18,677 16,689 17,906


Services: debit -18,388 -16,948 -18,107
Balance on services 289 -259 -201

Income: credit 8,984 8,063 8,194


Income: debit -19,516 -18,332 -19,884
Balance on income -10,532 -10,269 -11,690

Current transfers: credit 2,622 2,242 2,310


Current transfers: debit -2,669 -2,221 -2,373
Balance on current transfers -47 21 -63

Questions 2000 2001 2002

3.1 What is Australia's balanc -4,813 1,786 -5,431


(goods exports - goods imports)

3.2 What is Australia's balance 289 -259 -201


(services credit - services debit)

3.3 What is Australia's balance -4,524 1,527 -5,632


(balance on goods + balance on services)

3.4 What is Australia's current -15,103 -8,721 -17,385


(the sum of the four balances listed above,
goods, services, income, and current transfers)
2003 2004 2005 2006

70,577 87,207 107,011 124,913


-85,946 -105,238 -120,383 -134,509
-15,369 -18,031 -13,372 -9,596

21,205 26,362 31,047 33,088


-21,638 -27,040 -30,505 -32,219
-433 -678 542 869

9,457 13,969 16,445 21,748


-24,245 -35,057 -44,166 -54,131
-14,788 -21,088 -27,722 -32,383

2,767 3,145 3,333 3,698


-2,851 -3,414 -3,813 -4,092
-84 -269 -480 -394

2003 2004 2005 2006

-15,369 -18,031 -13,372 -9,596

-433 -678 542 869

-15,802 -18,709 -12,830 -8,727

-30,674 -40,066 -41,032 -41,504


2007 2008 2009 2010

142,421 189,057 154,777 213,782


-160,205 -193,972 -159,216 -196,303
-17,784 -4,915 -4,439 17,479

40,496 45,240 40,814 46,968


-39,908 -48,338 -42,165 -51,313
588 -3,098 -1,351 -4,345

32,655 37,320 27,402 35,711


-73,202 -76,719 -65,809 -84,646
-40,547 -39,399 -38,407 -48,935

4,402 4,431 4,997 5,813


-4,690 -4,805 -5,799 -7,189
-288 -374 -802 -1,376

2007 2008 2009 2010

-17,784 -4,915 -4,439 17,479

588 -3,098 -1,351 -4,345

-17,196 -8,013 -5,790 13,134

-58,031 -47,786 -44,999 -37,177


2011 2012 2013

271,719 257,950 254,164


-249,238 -270,136 -249,774
22,481 -12,186 4,390

51,653 53,034 53,344


-61,897 -65,405 -67,399
-10,244 -12,371 -14,055

47,852 47,168 45,910


-102,400 -88,255 -83,618
-54,548 -41,087 -37,708

7,510 7,271 7,206


-9,723 9,635 9,390
-2,213 16,906 16,596

2011 2012 2013

22,481 -12,186 4,390

-10,244 -12,371 -14,055

12,237 -24,557 -9,665

-44,524 -48,738 -30,777

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy