1. – Using the following information, determine each one of the theoretical Exchange Rates (E.R.) for December of year 02 according to the Relative PPP Theory. ΜARKET MARKEΤ E.R. E.R. COUNTRY CURRENCY CPI CPI Dec-01 Dec-02 Dec-01 Dec-02 Mexico MXP 231.89 264.3546 19.56 20.15 Turkey TRY (Lira) 498 527.88 5.9419 6.07673 Australia AUD 989 1038.45 1.7759 1.81183 Japan JPY 678 745.8 105.866 113.978 United Kingdom GBP 905.26 986.7334 0.5991 0.617849 South Korea KRW (Won) 795.4 874.94 1,658.62 1,793.37 Canada CAD 523.12 554.5072 1.3736 1.4942 U.S.A. USD 1.5 1.56

1. – Using the following information, determine each one of the theoretical Exchange Rates (E.R.) for December of year 02 according to the Relative PPP Theory. ΜARKET MARKEΤ E.R. E.R. COUNTRY CURRENCY CPI CPI Dec-01 Dec-02 Dec-01 Dec-02 Mexico MXP 231.89 264.3546 19.56 20.15 Turkey TRY (Lira) 498 527.88 5.9419 6.07673 Australia AUD 989 1038.45 1.7759 1.81183 Japan JPY 678 745.8 105.866 113.978 United Kingdom GBP 905.26 986.7334 0.5991 0.617849 South Korea KRW (Won) 795.4 874.94 1,658.62 1,793.37 Canada CAD 523.12 554.5072 1.3736 1.4942 U.S.A. USD 1.5 1.56

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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a) Using the following information, determine each one of the theoretical Exchange Rates (E.R.) according to International Fisher Effect. b) Show how Money Market Arbitrage could be done assuming that the loan is 1,000 units of the currency of the country where the loan is contracted. Determine the profit in the currency in which the loan was contracted. ΜARKET ΜARKET E.R. E.R. COUNTRY CURRENCY INTEREST Dec-01 Dec-02 Dec-02 Mexico MXP 12 % 19.56 20.15 Turkey TRY (Lira) 6 % 5.9419 6.07673 Australia AUD 4 % 1.7759 1.81183 Jаpan JPY 8 % 105.866 113.978 United GBP 5 % 0.5991 0.617849 Kingdom (UK) South Korea KRW (Won) 9% 1,658.62 1,793.37 Canada CAD 5 % 1.3736 1.4942 U.S.A.. USD 3%
4) Suppose the price level in India is 9,500, the price level in the United States is 140, and the price level in Brazil is 750. Suppose the current nominal exchange rates are 75 Indian rupee per dollar and 5 Brazilian real per dollar. Calculate the real exchange rates (rounded to two decimal places) between each pair of countries. Note that you will have to first calculate the nominal exchange rate between Brazil and South India before calculating the real exchange rate between those two countries. (4
Not use Ai
A 144.
1D
Which of the following increases the price of the dollar relative to the Mexican peso? Select oneE a. an increase in the supply of dollars b. an increase in the demand for dollars C. a decrease in the supply of pesos d. an increase in the demnand for pesos
4. Pricing foreign goods
MC Qu. 41-33 The plus items In the table... (1) Goods Exports (2) Balance on Capital Account +$200 (3) Net Transfers (4) Imports of Services (5) Net Investment Income (6) US Purchases of Assets Abroad -100 -50 (7) Goods Imports -250 (8) Foreign Purchases of Assets in +150 the US (9) Exports of Services 450 The plus items in the table are "export-type" entries and the minus items are "import-type" entries In the balance of payments for the hypothetical country of Zippo. The financial account items for Zippo are