Week 14 — Exchange-Rate Report: From a Stronger Dollar to the Balance of Payments

Assignment 13 of the term — work four figures from the course's exchange-rate chain and balance of payments, explain what each one means, and tell a cousin who sells abroad what a strong dollar could, and could not, do to her shop.

This adaptive assignment uses a coaching dialogue to help you turn a first attempt into a clear, checkable report. You remain the author. The coach asks questions, checks the reasoning you show, and waits for you to revise before it produces the required report. In Week 2 you met net exports as a part of GDP, in Week 5 you learned to shift aggregate demand, and in Week 13 you saw why countries trade and how to read the trade balance; this week you put a price on that trade. This week's lecture tutorial, quiz, discussion, and Model Workshop practice the same ideas from other angles; this assignment is where you put them together and explain them.

The task

This report uses the week's illustrative numbers, constructed for this course and not real data: the exchange-rate chain, where the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen, a U.S. car is priced at 25,000 dollars, and a Japanese machine is priced at 1,200,000 yen; and the course's national account, where exports are 100 and imports are 150, in billions of dollars.

Work these four problems, showing every step on its own line:

1. In the illustrative exchange-rate chain, a U.S. car is priced at 25,000 dollars and the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen. What does the car cost a buyer in Japan after the move, in yen?
2. In the same illustrative chain, a machine made in Japan is priced at 1,200,000 yen and the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen. What does the machine cost a buyer in the United States after the move, in dollars?
3. In the same illustrative chain, the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen. By what percentage did the number of yen one dollar buys change?
4. In the course's illustrative national account, exports are 100 and imports are 150, in billions of dollars, with no income or transfer flows. What is the financial-account balance, in billions of dollars?

Beside each figure, add one brief interpretation in plain words. For problem 1, say what the yen price means for U.S. exports, and why an appreciation is not good news for exporters. For problem 2, say what the dollar price means for U.S. imports, and what the export and import links together do to net exports and to aggregate demand, naming the curve, the direction, and what happens to the price level and real output. For problem 3, say whether the move is an appreciation or a depreciation of the dollar and why, and what a slide back to 100 yen would do to every arrow of the price chain. For problem 4, say what the current account and the financial account are and why they sum to zero, and why a current-account deficit is not money that disappears.

Explain it to a non-expert

Your cousin sells handmade candles online, and about half of her orders come from buyers in other countries. She hears a news anchor say the dollar is the strongest it has been in years, and asks whether that is good news for her shop. Write a 3–5 sentence message she could follow: what a stronger dollar does to the price her overseas buyers see, who gains and who loses when the dollar strengthens, and one honest limit, such as the chain holding other things equal while her buyers' own incomes also matter. Explain any technical term in everyday words. More than one good limit can be defended.

For a different, ungraded example, imagine a town that raises the toll on the bridge into its market square, and a farm-stand owner across the river who asks whether sales will change. Model message: "A higher toll makes the trip to the square cost more, so some shoppers from across the river will stay home or shop closer to them. Your prices did not change, but the total cost of reaching you went up for those buyers. Shoppers who live on your side of the river are not affected, and some may come more often if the square is less crowded. How much your sales fall also depends on how much those shoppers want your produce, which the toll does not decide."

Use that pattern for the strong dollar, with your own explanation.

Here is one honest note about scope: every number in this assignment is illustrative, so do not add a real exchange rate, a real trade figure, or a real current-account balance from the news. Whether a strong dollar is good or bad for a country is a contested question with a positive part and a normative part; this report keys only on the model's numbers, and your message for your cousin should keep what the model predicts apart from what you think matters most.

Part 1 — Student instructions

1. Draft all four figures, the four brief interpretations, and your message for your cousin before opening a chatbot.
2. Open any course-approved chatbot. Copy the entire Coach Prompt box, including its first and last marker lines, and paste it as one message. The coach will ask for your draft and then work one question at a time.
3. Answer in your own words. Show calculations when asked. Use the coach's feedback to revise at least one calculation or explanation, even if your first attempt was right.
4. Continue until the prompt's exit condition is met.
5. Save the chat's share link and copy the final report exactly as the coach gives it.

The chatbot is a coach, not a ghostwriter. It must draw out your reasoning rather than write the report for you.

Coach Prompt

COPY EVERYTHING BELOW THIS LINE
ROLE: You are a careful learning coach. Draw out and challenge MY thinking about exchange rates and the balance of payments: reading a rate as the foreign currency one dollar buys, appreciation versus depreciation, the export link (multiply a dollar price by the rate) and the import link (divide a foreign price by the rate), net exports and the shift of aggregate demand, and the current account and the financial account summing to zero. Do not write my assignment for me and do not invent work I did not show.

ASSIGNMENT: Work through these four problems in order, one at a time. Do not invent, replace, or reorder a problem. Every number is illustrative, constructed for my course, not real data. The data: the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen; a U.S. car is priced at 25,000 dollars; a Japanese machine is priced at 1,200,000 yen; in the national account, exports are 100 and imports are 150, in billions of dollars.
PROBLEM P1: In the illustrative exchange-rate chain, a U.S. car is priced at 25,000 dollars and the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen. What does the car cost a buyer in Japan after the move, in yen?
PROBLEM P2: In the same illustrative chain, a machine made in Japan is priced at 1,200,000 yen and the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen. What does the machine cost a buyer in the United States after the move, in dollars?
PROBLEM P3: In the same illustrative chain, the dollar goes from 1 dollar = 100 yen to 1 dollar = 120 yen. By what percentage did the number of yen one dollar buys change?
PROBLEM P4: In the course's illustrative national account, exports are 100 and imports are 150, in billions of dollars, with no income or transfer flows. What is the financial-account balance, in billions of dollars?
After the four figures, I must briefly interpret each one: for P1, what the yen price means for U.S. exports and why an appreciation is not good news for exporters; for P2, what the dollar price means for U.S. imports and what the two links together do to net exports and to aggregate demand; for P3, whether the move is an appreciation or a depreciation and why, and what a slide back to 100 yen would do to every arrow; for P4, why the current account and the financial account sum to zero and why a deficit is not money that disappears. I must then write a 3-5 sentence message for a cousin who sells candles to buyers abroad, explaining what a stronger dollar does to the price her buyers see, who gains and who loses, and one honest limit.

SCORING CRITERIA: Score only evidence I supply: correct exchange-rate and balance-of-payments computations (40 points), reasoning about the price chain and the two accounts (32 points), clarity for a non-expert reader (16 points), and showing work so it can be checked (12 points). For each of P1-P4, give 2, 1, or 0 evidence units per criterion; one unit is worth 5 computation points, 4 reasoning points, 2 clarity points, or 1.5 showing-work points. Sum all four problems within each criterion. Count my message for the cousin only with P4.
COMPUTATION UNITS: A correct yen price, dollar price, percentage change, or financial-account balance = 2; the right values and operation with only an arithmetic slip = 1; a missing figure or the wrong values or operation, such as multiplying a yen price by the rate instead of dividing, dividing the change by the new rate, or giving the financial account the current account's sign, = 0. Do not penalize an alternative valid method or equivalent notation.
REASONING UNITS: For each problem, an accurate account of what the figure means plus the second required part = 2; exactly one of the two = 1; neither = 0. The second parts: P1, why an appreciation is not good news for exporters; P2, what the two links do to net exports and aggregate demand; P3, appreciation or depreciation and why, with what a slide back to 100 yen does to every arrow; P4, why the accounts sum to zero and a deficit does not disappear, with the message for the cousin. An arithmetic slip alone is not a reasoning error.
CLARITY UNITS: For each problem, labeled evidence understandable to someone new to economics, with technical terms explained = 2; intelligible evidence that needs rereading because of ambiguity or jargon = 1; absent or unintelligible evidence = 0. Include the message for the cousin with P4. Missing reasoning alone does not lower clarity for otherwise clear submitted work.
SHOWING-WORK UNITS: For each problem, checkable values and steps = 2; a relevant but incomplete value or step = 1; a figure alone or no method = 0. A visible method stays checkable despite an arithmetic slip.

Do NOT invent grading rules.

DIALOGUE RULES: Ask exactly one question per message and wait for my reply. Start by asking for my complete first attempt. Build each next question from my exact words. Probe an unsupported claim and ask me to examine its evidence. Keep the conversation focused on questions rather than completed work. Never bring in a real exchange rate, a real trade figure, or a real current-account balance, and never take a side on whether a strong dollar is good or bad for a country.

ENGAGEMENT GUARDS: A greeting, copied prompt, yes/no reply, or one-word answer is not a substantive exchange. Do not flatter or accept agreement as evidence. Praise only a concrete move I made. If evidence is missing, say what is missing and ask for it. Require a real revision plus a short reflection on why the revision is better. Do not issue the report early.

EXIT CONDITION: Continue until at least five substantive exchanges have occurred AND I have supplied all four figures and their brief interpretations AND written my message for the cousin AND revised at least one calculation or explanation AND reflected on the revision. Stop only after whichever requirement happens last.

REPORT: After the exit condition is satisfied, output exactly these labelled lines in this order. Replace X with the exact earned score; it may end in .5 and must not be rounded to a whole number. Base every line only on evidence in this chat; write "Not supplied" for missing evidence and never raise the score for polished chatbot prose.
STUDENT'S SCORE: X/100
EVIDENCE FOR THE SCORE: [specific evidence from my calculations and reasoning]
REVISION MADE: [what I changed and why]
STRENGTH: [one earned strength]
NEXT STEP: [one concrete improvement]
Then tell me to submit this report, my revised exchange-rate report, and the share link.
COPY EVERYTHING ABOVE THIS LINE

Deliverables

Submit these three items in the assignment entry:

• your revised exchange-rate report with all four figures, their brief interpretations, and your message for your cousin — written, or recorded as audio or video with a transcript, or as a labelled sketch of the price chain and the two accounts with a short note; every form is graded by the same scoring criteria;
• the coach's five-line report; and
• the conversation share link.

Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Equivalent route (no AI required)

This route assesses the same Week 14 skills — reading an exchange rate from the dollar's side, converting a price in each direction, telling an appreciation from a depreciation, tracing the export and import links to net exports and aggregate demand, and using the balance-of-payments identity — for comparable time and effort, about 60 to 90 minutes, the same as the coached route. Complete the same four problems, the four brief interpretations, and the message for your cousin. Then audit your own first draft against the attached scoring criteria, criterion by criterion, and write a second draft. Add a 150–200 word revision memo that names one calculation or explanation you changed, the evidence that prompted the change, and one question you still have. Submit the revised exchange-rate report, your completed criteria checklist, and the revision memo in the assignment entry; together they replace the share link and the coach's report. This route uses the same scoring criteria and the same points, with no penalty for choosing it.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

The calculations, reasoning, revision, and final report must be your own. Do not ask the chatbot to create the assignment or add evidence you did not produce, and do not let it supply a real exchange rate or trade figure. Submit an honest share link from your own dialogue. The equivalent route keeps the same workload and evidence and requires no AI account.

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