Suppose the U.S. price level is $10,000/consumption bundle and that the Norwegian price level is NOK97,000/consumption bundle. Suppose also that the exchange rate is NOK9.0000/$. What is the external purchasing power of $1? 0.00097 0.001 0.000093 0.00927 0.09
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- If an American traveling abroad can obtain 115 euros for $100 U.S, the current euro per $ exchange rate is: a. 0.870 euros/$ b. 1.15 euros/$ c. 115euros/$ d. 1euro/1.15$A box of chocolate candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate? Ⓒa 1 U.S. dollar equals 1.44 Swiss francs Ob. 1 U.S. dollar equals 1.21 Swiss francs Oc1 US dollar equals 1.29 Swiss francs d. 1 U.S. dollar equals 0.69 Swiss francs e. 1 U.S. dollar equals 0.85 Swiss francs1. You have an accounts payable to a German exporter for 100 Porsche Cayenne SUVs. The seller offers a 2 percent discount for payment within 10 days and full payment due in 30 days (2/10 net 30). Today the exchange rate is $1.40 per Euro. You notice that the 30 day forward rate for the $/Euro is $1.38…..what should you do? You owe 70,000 Euros for each of the cars (before any discounts). [show your work!] 2. You are changing planes in London for a flight to Paris where you will connect with your flight to Capetown. You are picking up reading material for the flight and are looking at the prices listed on the Economist magazine which conveniently lists prices in several different global currencies. You note that the price in Pounds is 2.40 pounds and the price in Euros is 2 Euros. The exchange rate for the dollar (your credit card was issued in the USA) is $1.59/pound and $1.3837/euro. Should you buy reading materials now or wait until you’re in Paris? 3. You notice that the…
- The current exchange rate is $1.19 / Euro. The expected inflation rate for the next year in the U.S. is 0.62% while it is 0.79% in the EU. What would be the expected exchange rate in one year’s time if Purchasing Power Parity holds? Provide your answer till 4 digits after the decimal point. Based on yourresult, is the Euro expected to appreciate or depreciate?What is purchasing power parity? Suppose a Starbucks tall latte cost $4.00 in the United States and 3.20 euros in the Euro area. Also, suppose a McDonald’s Big Mac costs $3.50 in the United States and 2.45 euros in Euro area. If the nominal exchange rate is 0.80 euros per dollar, which goods have prices that are consistent with purchasing power parityDollars per Franc So .70 60 .50 40 Do D2 3 4 5 6 7 Quantity of Francs (Milions) Refer to Figure 14.1. Suppose that the United States increases its imports from Switzerland, resulting in a rise in the demand for francs from Do to D1. Under a floating exchange rate system, the new equilibrium exchange rate would be: Select one: а. $0.40 per franc b. $0.50 per franc С. $0.60 per franc d. $0.70 per franc
- If the Japanese price level rises by 5% relative to theprice level in the United States, what does the theoryof purchasing power parity predict will happen to thevalue of the Japanese yen in terms of dollars?3 / 3 100% 每 8. The price of a laptop in the United States is $1,000. The price of a car in taly is 10,000 euros The current exchange rate rs09 curos per dollr. Ifa laptop is exported from the United Startes to Italy with no barriers to trade, what will be the price of the aptop in Italy? Ira car is imported to the United States from luh with barriers to trade, what will be the price of the crin ahe Ented Statres? Suppose the dollar appreciates by 0pereent aganscihecomo. Whr will be the price ofa computer exporied from the United States changem ltaly? -Suppose thhe dollarapprecites br 10 percentagamst the curoWt willbethe price of a car inmported to the Enred States from Ital chnge m tdhe Eaed Statese (8 marks) (2marks) 2marks) (2marks] (2marks)The following table shows the nominal and real exchange rates for two countries and two years (OECD, 2020a,b). The column names are the country codes (not the currency codes) and the exchange rates are expressed as the amount of the currency per unit of US dollar. Year 1979 1984 i. DNK: O Increased ii. ISL: DNK O Increased 5.2610 10.3566 Decreased Remained unchanged Decreased Nominal a. Indicate whether the cost of goods in each country has increased, decreased, or remained unchanged, relative to the cost of goods in the United states between 1979 and 1984. Remained unchanged ISL 3.5260 31.6937 DNK 0.6621 1.1781 Real ISL 0.8612 1.3433
- A can of soda costs $1.25 in the United States and25 pesos in Mexico. What is the peso–dollar exchangerate (measured in pesos per dollar) if purchasingpower parity holds? If a monetary expansion causesall prices in Mexico to double, so that a soda nowcosts 50 pesos, what happens to the peso–dollarexchange rate?A can of soda costs $1.25 in the United States and 25 pesos in Mexico. What is the pesos-dollar exchange rate(meaured in pesos per dollar) if purchasing-power parity holds? If a monetary expansion caused all prices in mexico to double, so that soda rose to 50 pesos, what would happen to the peso-dollar exchnage rate?Economics Suppose that the price level in Canada is 110, and the price level in Temeria is 130. What should be the nominal exchange rate such that the purchasing power parity between the two countries hold? A. 1.182 Temerian Oren per Canadian Dollar B. 0.923 Temerian Oren per Canadian Dollar C. 1.083 Temerian Oren per Canadian Dollar D. 0.846 Temerian Oren per Canadian Dollar E. 1 Temerian Oren per Canadian Dollar
