Assume that initially PPP holds, if the inflation rate in your country falls relative to the inflation rate in the United and will States. The domestic currency is. Select one: a. undervalued; depreciate O b. overvalued; depreciate O c. remain unchanged O d. overvalued; appreciate O e. undervalued; appreciate
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- Discuss Fiat, Seingiorage and Petro DollarAssume that initially PPP holds, if the inflation rate in your country falls relative to the inflation rate in the United States. The domestic currency is and will Select one: a. undervalued; appreciate b. undervalued; depreciate c. remain unchanged d. overvalued; appreciate e. overvalued; depreciate1. a) Is the following graph about the "Purchasing Power of the Diminishing Dollar" misleading? Why or why not? GELİNAARADICS ANKAPILA 1998-ESENHOWR$1.00 WERNER FALT THE END OF AMERICA ELEMEN 5-% JUVE SANA 1993-MINNE94 THE EMERS Purchasing Power of the Diminishing Dollar 1968-JOHNSON 1973-MXON M 1978-CARTER A b) Provide a time-series graph that accurately reflects the data: [(1978- Carter, $0.44), (1973- Nixon, $0.64), (1968- Johnson, $0.83), (1963- Kennedy, $0.96), (1958-Eisenhower, $1.00).
- Somebody has bought US Dollar with two-third of his money and Euro with one-third. Dollar has gained value overnational currency by 1.8 % each month and Euro 1.2 % each month. The average monthly inflation rate is 3. Find thepercentage loss of him/her at the end of a year.Brazil began indexing various categories of income to a. slow inflation. O b. keep prices from rising even faster. O c. improve a balance of payments deficit. O d. protect citizens from the effects of inflation.Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. (i) What is the nominal exchange rate?e - enor-P Use the expression: rea! - PrOT ,where ereal is real exchange rate, enor is nominal exchange rate, P is domestic price level and Pro, is foreign price level (ii) Suppose the real exchange rate rises by 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change?
- (b) Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. (i) What is the nominal exchange rate? Use the expression: ereal= enor*P / Pfor where ereal is real exchange rate, enor is nominal exchange rate, P is domestic price level and Pfor is foreign price level. (ii) Suppose the real exchange rate rises by 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change?AE Ap Ap suggests that p where E is domestic price of one unit of foreign currency (e.g., Rs100 = $1) Q.23 Purchasing power parity which can be written as A. The home currency will appreciate if the current home inflation exceeds the current foreign inflation rate. B. The home currency will appreciate if the current foreign inflation rate exceeds the current domestic inflation rate. C. The home currency will depreciate if the current home interest rate exceeds the current Foreign interest rate D. The home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate. E. Both B and D are correct.Time left 0:56 Currently, It takes two Belize dollars to buy a U.S. dollar. If that number were to rise to three, then the Belize currency would have (appreclated, depreclated) and It would be (more, less) expensive for American tourlsts to vacation In Bellze. Select one: a. depreclated; more O b. depreciated; less. Oc. appreciated; more. d. appreclated; less. Next page
- A South American country has had a high rate of inflation. Recently, its exchange rate was 15 cruzados per dollar; that is, one dollar will buy 15 cruzados. It is likely that the country will continue to experience a 25% inflation rate and that the U.S. will continue at a 3% inflation rate. Assume that the exchange rate will vary the same as the inflation. In this situation, one dollar will buy how many cruzados 5 years from now?In the long run, with relative PPP, if country A consistently has higher inflation than country B, then country A's currency will be against country B's. O appreciating O depreciating O maintaining its valueIf the Canadian dollar depreciates, it means that Select one: A. one Canadian dollar buys less foreign currency. B. the Canadian economy is becoming less stable. C. Canadians are buying too many imports. D. prices in Canada are rising. O E. inflation has eroded the purchasing power of Canadian money.