2. Home price level is PH = 100CH and Foreign price level is 40CF. If the absolute purchasing power parity holds, how much is the exchange rate? If Foreign price changed to 50CF, assuming the PPP still held, how would Home currency change: Appreciate or Depreciate? Exchange rate: Home currency:
2. Home price level is PH = 100CH and Foreign price level is 40CF. If the absolute purchasing power parity holds, how much is the exchange rate? If Foreign price changed to 50CF, assuming the PPP still held, how would Home currency change: Appreciate or Depreciate? Exchange rate: Home currency:
Chapter1: Making Economics Decisions
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![2. Home price level is PH = 100cH and Foreign price level is 40CF. If the absolute purchasing power parity
holds, how much is the exchange rate? If Foreign price changed to 50CF, assuming the PPP still held, how
would Home currency change Appreciate or Depreciate?
Exchange rate:
Home currency:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fc8cdf1-1696-4e19-9eab-8b0e4cff661f%2F0f734711-f962-4535-a74e-d23db637e456%2Frzs7jhj_processed.png&w=3840&q=75)
Transcribed Image Text:2. Home price level is PH = 100cH and Foreign price level is 40CF. If the absolute purchasing power parity
holds, how much is the exchange rate? If Foreign price changed to 50CF, assuming the PPP still held, how
would Home currency change Appreciate or Depreciate?
Exchange rate:
Home currency:
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