Easy economics questions..?

Question

1. why are the mangs cheaper during summer?
2. why foreign exchange rate tend to increase every time there is a political crisis?

mangos*

Answer 1

These both have to do with determinants of supply and demand.

One determinant of supply is that supply increases for naturally-produced goods (ie produce) during the growing season. As you know, an increase in supply shifts the curve outward, leading to a lower equilibrium price.

One determinant of demand is confidence in that commodity. If you consider currency to be a commodity, and the government backing that currency (since most money today is fiat money without the backing of precious metals) is between a rock and a hard place, the imputed value of that currency diminishes.

Alternatively, suppliers in a nation in the throes of political crisis (I'm thinking Bosnia in 1994 as opposed to Florida in 2000) are themselves not necessarily secure. As it is riskier to operate, and the possibility of loss of manufactured goods is greater, there is less demand for the currency of that nation, which causes the exchange rate to appreciate against that currency.

Answer 2

1) because there a more of them at that time than any time of year.
2) assuming the question is correect, it's because political instability creates a demand on money....which really doesn't make sense, because it should lesson demand on money.....depending on your point of view i guess.