7 Suppose the exchange rate was 104 yen per dollar in 2017 and 110 yen per dollar in 2018. The dollar (Click to select) increased decreased in value and the yen (Click to select) increased decreased in value.

7 Suppose the exchange rate was 104 yen per dollar in 2017 and 110 yen per dollar in 2018. The dollar (Click to select) increased decreased in value and the yen (Click to select) increased decreased in value.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter36: Exchange Rates And Financial Links Between Countries

Section: Chapter Questions

Problem 9E

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1 Suppose that two countries, Indonesia and Vietnam, produce coffee. The currency unit used in Indonesia is the Rupiah (IDR). The currency unit used in Vietnam is the Dong (VND). In Vietnam, coffee sells for 4,500 dong (VND) per pound. The exchange rate is 1.57 VND per 1 IDR, EVND/IDR = 1.57. 2 If the law of one price holds, what is the price of coffee in Indonesia, measured in Rupiah (assume we are talking about the same type of coffee)? Please round your answer to the nearest whole number. Assume the price of coffee in Indonesia is actually 3000 IDR per pound. Compute the relative price of coffee in Indonesia versus Vietnam (round your answer to 2 decimal places). Where will coffee traders buy coffee? Where will they sell coffee in this case? How will these transactions affect the price of coffee in Vietnam? In Indonesia?
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The___________exchange rate between the currencies of two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country's currency will purchase ______________quantity of goods and services in the second country as it does in the first. purchasing power-parity (PPP), the same purchasing power-parity (PPP), a larger market, the same market, a smaller