Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please all solve the question but don't copy
![Q9. Find a correc one for [Q9].
O 1) 0.2
O 2) 0.4
O 3) 0.6
O4) 0.8
O 5) 1.0
10. Find a correc one for [Q10].
O 1) 0.2
O 2) 0.4
O 3) 0.6
O4) 0.8
O 5) 1.0
11. Find the appropriate one for [Q11]: The home currency is
- valued.
O 1) fair
O 2) over
O 3) under
O 4) uncertain
12. Find the appropriate one for [Q12]: The home currency is
- valued.
O 1) fair
O 2) over
O 3) under
O 4) uncertain
13. Find the appropriateone for [Q13]: The home currency is
- valued.
O 1) fair
2)
over
O 3) under
O 4) uncertain
14. Find a correct one for [Q14]
O 1) 10%
O 2) 20%
O 3) -10%
O4) -20%
O 5) none of a) -d)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad7331c8-2785-479b-9131-addb1c160fd5%2F5c5f5abc-2f7b-45d3-b20f-40c8fbefe7a3%2Fn3kmx1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Q9. Find a correc one for [Q9].
O 1) 0.2
O 2) 0.4
O 3) 0.6
O4) 0.8
O 5) 1.0
10. Find a correc one for [Q10].
O 1) 0.2
O 2) 0.4
O 3) 0.6
O4) 0.8
O 5) 1.0
11. Find the appropriate one for [Q11]: The home currency is
- valued.
O 1) fair
O 2) over
O 3) under
O 4) uncertain
12. Find the appropriate one for [Q12]: The home currency is
- valued.
O 1) fair
O 2) over
O 3) under
O 4) uncertain
13. Find the appropriateone for [Q13]: The home currency is
- valued.
O 1) fair
2)
over
O 3) under
O 4) uncertain
14. Find a correct one for [Q14]
O 1) 10%
O 2) 20%
O 3) -10%
O4) -20%
O 5) none of a) -d)
![9. [Q9 -Q14: Treat each of the countries listed as the home country and the US as
the (common) foreign country]
Suppose the price of SmallMac (a globally produced and traded good) in the US
is Pus = $40. You are supposed to examine whether the currency of each non-
US country is currently fair/over/under-valued and calculate the expected rate
of depreciation of the home currency, resorting to the PPP theory (in its absolute
form).
Brazilian
Indian
Mexican
Home Currency
Real
Rupee
Peso
Nominal ER, EH/S
2
45
10
Price of home-produced SmallMac
80
3000
320
(in home currency)
Price of US-produced SmallMac
?
?
?
(in home currency)
Real ER, 9H/S
[Q9]
[Q10]
?
Is
home
currency
under-
or
[Q11]
(Q12]
[Q13]
overvalued?
Expected rate of depreciation of the
?
[Q14]
home currency (implied by PPP)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad7331c8-2785-479b-9131-addb1c160fd5%2F5c5f5abc-2f7b-45d3-b20f-40c8fbefe7a3%2Fyk62g4e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:9. [Q9 -Q14: Treat each of the countries listed as the home country and the US as
the (common) foreign country]
Suppose the price of SmallMac (a globally produced and traded good) in the US
is Pus = $40. You are supposed to examine whether the currency of each non-
US country is currently fair/over/under-valued and calculate the expected rate
of depreciation of the home currency, resorting to the PPP theory (in its absolute
form).
Brazilian
Indian
Mexican
Home Currency
Real
Rupee
Peso
Nominal ER, EH/S
2
45
10
Price of home-produced SmallMac
80
3000
320
(in home currency)
Price of US-produced SmallMac
?
?
?
(in home currency)
Real ER, 9H/S
[Q9]
[Q10]
?
Is
home
currency
under-
or
[Q11]
(Q12]
[Q13]
overvalued?
Expected rate of depreciation of the
?
[Q14]
home currency (implied by PPP)
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