Please answer in an 'A,B,C,D' format where A would be the first answer and D would be the last. Thank you.
Answer 22
$1 US=$1.5 Canadian
And CD cost is $10 US and $15 canadian hence the ratio is $1 US =$15/10=$1.5 canadian.
Hence Purchasing parity exists. Hence option D is correct
Answer 23
Normal exchange rate is $1 US= 2 yen
Exchange rate as per purchasing power of Big Mac is $ 2US =8 yen. Or $ 1 US=8/2=4 yen
Hence yen should depreciate and US dollar should appreciate as per PPP theory.
Hence option C IS CORRECT
ANSWER 24
Target rate is $1 US= 11 peso bit actual rate is $1 US=10 peso. Hence the demand for dollars will increase, fed should reduce supply to increase the rate to 11 peso. Hence Fed should buy dollars.
Hence option D is correct
Answer 25
When US government will borrow more money the supply of dollars will reduce and hence the currency will appreciate.
Hence option D is correct.
Please answer in an 'A,B,C,D' format where A would be the first answer and D would...
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