Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 6, Problem 12E
To determine
To evaluate the current exchange rate represent
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In France, one kilogram of macadamia nuts costs 10.5Euro and 10 Dollars in Canadian in Canada. According to the law of one price, the expected exchange rate between the Euro and the Canadian would be_____
1.5Euro/$
0.12Dollar/Euro
1.67 Dollar/Euro
0.67 Euro/Dollar
Assume Australia to be home and Vietnam to be the foreign economy. If the real exchange rate q between Australia and Vietnam is 0.7 and the inflation rate differential (home inflation – foreign inflation) is -1%, given a 15% speed of convergence, what would be the expected rate of change in the nominal exchange rate (dollar per dong)?
If prices grew at a compound growth rate of 5% per annum in the United States and 0.08% per annum in Japan for the past eight years, what exchange rate represents PPP today if the two currencies, eight years ago, were in parity and exchanged at a rate of JPY 109/USD?
JPY 207.3/USD
JPY 209.9/USD
JPY 74.2/USD
JPY 73.3/USD
Chapter 6 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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