Homework Answers
By converting 14,250 won into dollars at an exchange rate of 900 won per dollar yields (14,250/900)= 15.83 dollars, is enough to buy the US basket but left with some amount , this means purchasing power parity doesn't hold. So, if the dollar appreciates and the exchange rate increases to 950 won per dollars ,then purchasing power parity will prevail. Therefore, If the exchange rate is 900 won per dollar , purchasing power parity implies that the dollar must appreciate to restore purchasing power parity. Hence,option(B) is correct.
Add Answer to:
3. Suppose a given basket of goods and services costs 15 dollars in Canada and 14,250...
33. Suppose a given basket of goods and services costs 6 dollars in Canada and 4,500...
33. Suppose a given basket of goods and services costs 6 dollars in Canada and 4,500 won in Korea. If the exchange rate is 900 won per dollar, purchasing power parity implies that: A) the exchange rate has attained its long run equilibrium value. B) the dollar must appreciate to restore purchasing power parity. C) the dollar must depreciate to restore purchasing power parity. D) the won must depreciate to restore purchasing power parity.
the first one Suppose a basket of goods costs $100 in the U.S. and €50 in...
the
first one
Suppose a basket of goods costs $100 in the U.S. and €50 in France. What exchange rate, in dollars per euro, would be consistent with purchasing power parity? $1 $2 $1.50 $0.50 and Suppose a country's central bank announces that it is increasing the money growth rate. The country's currency will suddenly its rate of depreciation will then appreciate; rise appreciate; fall depreciate; rise O depreciate; fall In the long run, with variable real exchange rates, if...
A market basket of goods costs $350 in the United States and 200 pounds in the...
A market basket of goods costs $350 in the United States and 200 pounds in the United Kingdom. According to the purchasing power parity theory, the exchange rate should move towards: $0.67 per British pound $1.50 per British pound $0.57 per British pound $1.75 per British pound
c) 3 marks The Bank of Canada currently has a monetary policy target of 2% inflation....
c) 3 marks The Bank of Canada currently has a monetary policy target of 2% inflation. Suppose that the Federal Reserve in the US holds inflation at 3% for a sustained period of time. Would the Canadian dollar appreciate or depreciate against the US dollar over time? What would be the effect on the real exchange rate? d) 3 marks Consider a small open economy in equilibrium. What would be the effects of a protectionist trade policy in the short...
19. Consider the following Solow-Swan model in which output per capita is given by y-Aks, the...
19. Consider the following Solow-Swan model in which output per capita is given by y-Aks, the total factor productivity parameter is 2, the savings rate is 50%, the depreciation rate is 20% and the population growth rate is 5%. The steady state value of the output per capita, y, for this economy is: 1 a. b. 4 c. 8 d. 16 20. Which of following best describes when purchasing power parity does and does not hold? a. A country with...
1a. In the foreign exchange market, a decrease in the world demand for Japanese exports a....
1a. In the foreign exchange market, a decrease in the world demand for Japanese exports a. shifts the demand curve for yen leftward, which causes the yen to appreciate. b. shifts the demand curve for yen rightward, which causes the yen to appreciate. c. shifts the demand curve for yen rightward, which causes the yen to depreciate. d. shifts the demand curve for yen leftward, which causes the yen to depreciate. 1b. A relatively high rate of inflation in the...
This Question: 1 pt 15 of 20 (14 complete This Out: 20 piso According to the purchasing power party theory, relativ...
This Question: 1 pt 15 of 20 (14 complete This Out: 20 piso According to the purchasing power party theory, relative price levels play an important role in determining exchange rates in the long run Suspose prices have been sing for in South Korean hend States, we then predict that O A The value of the won must decline OB. The value of the US dolar an the won will remain constant OC. The value of the US dollar must...
20. When a country's exchange rate depreciates, the price of: A: that country's goods abroad decreases...
20. When a country's exchange rate depreciates, the price of: A: that country's goods abroad decreases B: that country's goods abroad increases C: foreign goods sold in the country increases D: that country's goods produced and sold locally increases 21. A central bank may seek to influence its country's currency by: A: imposing limits on the number of goods that may be imported B: restricting the outflow of funds from the home country C: intervening directly in the FX market...
3,4 QUESTION 3 PPP fails in reality for all the following reasons except what? O A....
3,4
QUESTION 3 PPP fails in reality for all the following reasons except what? O A. Transportation costs OB. Trade barriers OC. Monopolistic or oligopolistic competition in goods markets D. Differences in inflation QUESTION 4 cheng, Sen... P Homework and Te... P 202 Homework an Remaining Time: 58 minutes, 39 seconds. Question Completion Status: B. Trade barriers C. Monopolistic or oligopolistic competition in goods markets o D Differences in inflation QUESTION 4 Suppose a basket of goods costs $50 in...
8) The price of one currency in terms of another is called A) the terms of...
8) The price of one currency in terms of another is called A) the terms of trade. C) purchasing power parity B) a currency band D) the exchange rate. 19) -- exchange rates are either held constant or allowed to fluctuate( ) only within very narrow boundaries, A) managed float exchange rate system B) Freely exchange rate system ) pegged exchange rate system D) fixed exchange rate system : ------- Is the replacement (Jap) of a foreign currency with U.S...
33. Suppose a given basket of goods and services costs 6 dollars in Canada and 4,500 won in Korea. If the exchange rate is 900 won per dollar, purchasing power parity implies that: A) the exchange rate has attained its long run equilibrium value. B) the dollar must appreciate to restore purchasing power parity. C) the dollar must depreciate to restore purchasing power parity. D) the won must depreciate to restore purchasing power parity.
the
first one
Suppose a basket of goods costs $100 in the U.S. and €50 in France. What exchange rate, in dollars per euro, would be consistent with purchasing power parity? $1 $2 $1.50 $0.50 and Suppose a country's central bank announces that it is increasing the money growth rate. The country's currency will suddenly its rate of depreciation will then appreciate; rise appreciate; fall depreciate; rise O depreciate; fall In the long run, with variable real exchange rates, if...
c) 3 marks The Bank of Canada currently has a monetary policy target of 2% inflation. Suppose that the Federal Reserve in the US holds inflation at 3% for a sustained period of time. Would the Canadian dollar appreciate or depreciate against the US dollar over time? What would be the effect on the real exchange rate? d) 3 marks Consider a small open economy in equilibrium. What would be the effects of a protectionist trade policy in the short...
19. Consider the following Solow-Swan model in which output per capita is given by y-Aks, the total factor productivity parameter is 2, the savings rate is 50%, the depreciation rate is 20% and the population growth rate is 5%. The steady state value of the output per capita, y, for this economy is: 1 a. b. 4 c. 8 d. 16 20. Which of following best describes when purchasing power parity does and does not hold? a. A country with...
This Question: 1 pt 15 of 20 (14 complete This Out: 20 piso According to the purchasing power party theory, relative price levels play an important role in determining exchange rates in the long run Suspose prices have been sing for in South Korean hend States, we then predict that O A The value of the won must decline OB. The value of the US dolar an the won will remain constant OC. The value of the US dollar must...
20. When a country's exchange rate depreciates, the price of: A: that country's goods abroad decreases B: that country's goods abroad increases C: foreign goods sold in the country increases D: that country's goods produced and sold locally increases 21. A central bank may seek to influence its country's currency by: A: imposing limits on the number of goods that may be imported B: restricting the outflow of funds from the home country C: intervening directly in the FX market...
3,4
QUESTION 3 PPP fails in reality for all the following reasons except what? O A. Transportation costs OB. Trade barriers OC. Monopolistic or oligopolistic competition in goods markets D. Differences in inflation QUESTION 4 cheng, Sen... P Homework and Te... P 202 Homework an Remaining Time: 58 minutes, 39 seconds. Question Completion Status: B. Trade barriers C. Monopolistic or oligopolistic competition in goods markets o D Differences in inflation QUESTION 4 Suppose a basket of goods costs $50 in...
8) The price of one currency in terms of another is called A) the terms of trade. C) purchasing power parity B) a currency band D) the exchange rate. 19) -- exchange rates are either held constant or allowed to fluctuate( ) only within very narrow boundaries, A) managed float exchange rate system B) Freely exchange rate system ) pegged exchange rate system D) fixed exchange rate system : ------- Is the replacement (Jap) of a foreign currency with U.S...
Most questions answered within 3 hours.
-
While rotating the tires on your car you notice a rock [mass =
0.1 Kg] stuck...
asked 1 hour ago -
Using MARS simulator, write MIPS programs according to
the following scenarios: Receive a positive integer number...
asked 3 hours ago -
An object in front of a concave mirror has a real image that is
11.5 cm...
asked 3 hours ago -
Consider the reaction, C3 H8 + O2 --> CO2 + H2O. How many
moles of O2...
asked 5 hours ago -
You and your opponent both roll a fair die. If you both roll the
same number,...
asked 5 hours ago -
In a study of the accuracy of fast food drive-through orders,
Restaurant A had 257 accurate...
asked 5 hours ago -
Identify and describe in detail the four categories of
institutions that could be included in a...
asked 5 hours ago -
In python
class Customer:
def __init__(self, customer_id, last_name, first_name, phone_number, address):
self._customer_id = int(customer_id)
self._last_name =...
asked 5 hours ago -
What is an example of a limitation in implementing a new
ERP system and how it...
asked 5 hours ago -
In a section of 9.7cm of an artery with a radius of 2.6mm there
is a...
asked 5 hours ago -
the two carboxylic acid groups of aspartic acid have different
acidities with pKa values of 2.1...
asked 5 hours ago -
Would CuCO3 aqueous salt combined with calcium chloride
form a solid precipitate? If so, what would...
asked 5 hours ago