A box of chocolate candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing powerparity (PPP) holds, what is the current exchange rate?Ⓒa 1 U.S. dollar equals 1.44 Swiss francsOb. 1 U.S. dollar equals 1.21 Swiss francsOc1 US dollar equals 1.29 Swiss francsd. 1 U.S. dollar equals 0.69 Swiss francse. 1 U.S. dollar equals 0.85 Swiss francs

Purchasing power parity or PPP is an important economic concept. This concept is used to compare the…

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? O a. 1 U.S. dollar equals 1.44 Swiss francs O b. 1 U.S. dollar equals 1.21 Swiss francs O c. 1 US. dollar equals 1.29 Swiss francs O d. 1 U.S. dollar equals 0.69 Swiss francs Oe. 1 U.S. dollar equals 0.85 Swiss francs

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? O a. 1 U.S. dollar equals 1.44 Swiss francs O b. 1 U.S. dollar equals 1.21 Swiss francs O c. 1 US. dollar equals 1.29 Swiss francs O d. 1 U.S. dollar equals 0.69 Swiss francs Oe. 1 U.S. dollar equals 0.85 Swiss francs

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

In the short run, all of the following are disadvantages of a fixed exchange rate regime except: O A. macroeconomic shocks must be addressed with fiscal policy. O B. open market operations are overused. OC. they can lead to future exchange rate crises. O D. interest rates are constant. According to Robert Mundell, for countries to constitute an optimal currency area, such as adopting a common currency, they must have: O A. a different composition of industries. O B. high factor mobility. O C. similar per capita GDP. O D. all of the above.
A10
In the foreign exchange market, an increase in the U.S. interest rate leads to in the exchange rate because the supply of dollars a fall; increases O b. no change; does not change Ос a rise; decreases O d. a rise; increases O . a fall; decreases
According to the Marshall-Lerner condition, when a country's currency depreciates in real terms its trade balance will improve if Your answer: O elasticity of demand for exports = 0.9; elasticity of demand for imports = -0.4 O elasticity of demand for exports = -0.8; elasticity of demand for imports = -0.3 O elasticity of demand for exports = 0.5; elasticity of demand for imports =- 0.2 O elasticity of demand for exports = 0.3; elasticity of demand for imports = -0.5
2
If Italian demand for Canadian lumber decreases, the supply of Canadian dollars to the foreign-exchange market will and the demand for euros will therefore O A. increase; increase O B. decrease; increase OC. decrease; decrease O D. remain the same; remain the same E. increase; decrease
Paul can produce 12 bu. of wheat or 4 bu. of corn if he produces only one product. Sam can produce 3 bu. of wheat or 3 bu. of corn if he produces only one product. A mutually beneficial exchange rate for Paul and Sam would be O 1 bu of wheat for 1/4 bu. of corn. O 1 bu, of wheat for 2 bu, of com. O 1bu. of corn for 2 bu. of wheat. O Ibu. of corn for 3 1/2 bu. of wheat.
Introduction to the foreign-currency exchange market
If Greece resumed the drachma and you wanted to forecast future exchange rates of the euro in Germany (or elsewhere in the EU) against it, which theory suggests that forecasts of relative inflation rates in the two countries can be used to estimate the future exchange rate of the drachma to the euro? O a. Big Mac Index b. Purchasing power parity (PPP) O c. Law of one price O d. Interest rate parity (IRP)
What does interest rate parity refer to? Inflation rates in all countries are identical O a. O b. Real exchange rates in all countries are identical None of the answers is correct O d. Nominal interest rates in all countries are identical
If the Americans increase the quota on Japanese electronic devices, the dollar tends to... O A. appreciate B. depreciate O C. appreciate then depreciate O D. be stable
How will an increase in tourist arrivals affect the market for foreign exchal Select one: O a. Inward shift of the demand curve; real exchange rate falls. O b. Inward shift of the supply curve; real exchange rate rises. O Outward shift of the demand curve; real exchange rate rises. O d Outward-shift of the supply curve, real exchange rate falls Inward shift of the demand curve, real exchange rate rises Next