Sirius has just finished high school and started looking for his first job, but has not yet found one. Other thingsthe same, the unemployment rateSelect one:O a. increases and the labor-force participation rate is unaffected.O b. is unaffected and the labor-force participation rate increases.O c. and the labor-force participation rate both increase.O d. and the labor-force participation rate are both unaffected. The purchasing power parity may not fully explain exchange rate movements becauseSelect one:O a. of changes in the price of goods and services not traded internationallyO b. the domestic price level changes by more than the foreign price levelO. monetary policy differs across countriesO d. the foreign price level changes by more than the domestic price levelO e. different countries have different inflation rates

Option (c). When a fresh student starts looking for job, he enter labor force and is unemployed.…

Answered: chasing power parity may not fully…

Business

Economics

chasing power parity may not fully explain exchange rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Explain why many industrialized countries do not often intervene in the foreign exchange market

A: The industrialized countries are countries that have a fully developed system of industries i.e. has…

Q: Examine how surpluses and deficits in the balance of payments (BOP) affect exchange rates.

A: Introduction - All central bank transactions are recorded in the account on the balance of payments…

Q: What policy would help the developing country maintain its fixed exchange rate?

A: Countries often take monetary policy measures to maintain their exchange rate system. A developing…

Q: Explain why a decline in a country's exchange rate will generally increase the demand for its goods…

A: Demand for goods and services by the countries results in trading. Export and imports and the main…

Q: How does the government intervene in the fixed exchange rate to keep it stable? Explain your answer…

A: Fixed exchange rate A fixed exchange rate is a type of exchange rate system in which a monetary…

Q: Consider an economy with zero capital mobility. Will exchange rate overshooting still occur? What…

A: In financial matters, overshooting, otherwise called the swapping scale overshooting speculation, is…

Q: What is one of the ways governments can influence exchange rates?

A: the government uses the exchange rate tool to achieve multiple objectives such as full employments,…

Q: What is Purchasing power parity Theory.

A: the Purchasing Power Parity (PPP) is an estimation that economists specialists use to look at the…

Q: Explain The relationship between purchase power parity and finance

A: PPP is an abbreviation for purchasing power parity, it is one way to measure exchange rates between…

Q: Is monetary approach an automatic adjustment mechanism to correct a deficit in the balance of…

A: The exchange rate is the rate at which the currencies of two countries can be traded for each other.…

Q: A fixed exchange rate system encourages speculators to attack weaker currencies. True False

Q: Would a domestic period of very high inflation make it easier or more difficult for a country to…

A: Answer to the question is as follows:

Q: What happens to the balance of trade if the nominal exchange rate depreciates?

A: According to the Marshall-Lerner condition if the exchange rate of a country depreciates it means…

Q: - Trade surplus leads to the decrease in money supply.

A: Under fixed exchange rate, the central bank peg the domestic currency to foreign currecy say US…

Q: If the Federal Reserve raises interest rates, what would happen to thepeso-dollar exchange rate in…

A: The rise in the interest rate of a country makes its investment attractive. Thus, a rise in the…

Q: Discuss the pros and cons of having a fixed exchange rate regime using your own words.

A: Fixed exchange rate is the system imposed by central bank or government that bind the official…

Q: Please list and explain in your own words the benefits and costs when a country adopts a flexible…

A: The currency regime in which the exchange rate is set by the market forces of demand and supply of a…

Q: Nominal exchange rate Real exchange rate Spot rate

A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…

Q: Provide an example of a direct quote of an exchange rate

A: In the foreign exchange market, a direct quote is a rate quotation. It compares the value of one…

Q: Explain how exchange rates are determined in international business

A: Exchange rate refers to the rate at which one country's currency can be exchanged for any other…

Q: Compare the effects of monetary and fiscal policies (i.e. strengthened or weakened) to maintain…

A: Before answering the above question, let us first understand some key concepts: Monetary policy…

Q: There are a number of factors that can affect exchange rates. List and explain at least three.

A: Exchange rates: The value for which one currency is exchanged for another is defined as the exchange…

Q: Assess the validity of the following statement: Due to exchange rate volatility, flexible exchange…

A: Flexible exchange rates occur when the determination of the exchange rates are left to the market…

Q: What's the impact on the exchange rate between the US and France if both France and the US increase…

A: The value of a country's currency to the currency of another country or economic zone is known as an…

Q: What problems result from government attempts to stabilize the exchange rate at a level that is not…

A: The exchange rate is the rate at which one country's currency is exchanged for another country's…

Q: Cite ways on how can a multinational corporation minimize its foreign exchange exposure.

A: A multinational corporation is a business unit that has its branches all over the world in different…

Q: Differentiate between fixed and flexible exchange rate systems

A: Fixed exchange rate is a system where the official exchange rate of the currency of that country is…

Q: How do exchange rate movements affect economic conditions? And provide at least one way an owner of…

A: Exchange rate movements and economic conditions If the exchange rate is depreciated against foreign…

Q: Explain the theoretical basis for alternative exchange rate regimes and why these might change over…

A: The four different types of exchange rate regimes that existed over time are: Fixed Flexible…

Q: How do changes in exchange rates affect international trade?

A: The exchange rate is determined by the demand(DD) & supply(SS) of currency. It is an important…

Q: If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long run…

A: The long run exchange rate is the rate at which two currencies can be exchanged for each other in…

Q: Explain how exchange rates may impact the performance of international equity investment.

A: Changes in exchange rates may not seem to affect most people in their everyday lives, but indirect…

Q: Identify two factors (or characteristics of economy) that underlie a nation’s decision to adopt a…

A: Foreign exchange market is an international mechanism for foreign currency purchases and selling.…

Q: What are two ways in which monetary policies and tight budgets allow a fixed exchange rate system to…

A: the AA-DD model to portray the impacts of financial, monetary, and exchange rate policy under an…

Q: Fixed exchange rate vs fixable exchange rate

A: The economy which does not trade with other economies is called a closed economy. However,…

Question

Sirius has just finished high school and started looking for his first job, but has not yet found one. Other things
the same, the unemployment rate
Select one:
O a. increases and the labor-force participation rate is unaffected.
O b. is unaffected and the labor-force participation rate increases.
O c. and the labor-force participation rate both increase.
O d. and the labor-force participation rate are both unaffected.

The purchasing power parity may not fully explain exchange rate movements because
Select one:
O a. of changes in the price of goods and services not traded internationally
O b. the domestic price level changes by more than the foreign price level
O. monetary policy differs across countries
O d. the foreign price level changes by more than the domestic price level
O e. different countries have different inflation rates

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Question 1.

VIEW

Question 2.

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What is the definition of the nominal exchange rate? What would cause the demand for the foreign exchange curve to shift to the right-hand side?
If a country consistently runs net export surpluses, then what will happen to its exchange rate?
For small, open economies that export and import a large volume of goods and services, a fixed exchange rate often make sense. Why does it make sense? And at what cost to the country?
Purchasing power parity suggests that exchange rates adjust to equalize the purchasing power of money across countries. Select one: True False
Introduction to the foreign-currency exchange market
True or False: A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.
If a government of a country with a zero trade balance increases its budget deficit, then what will be impact on the real exchange rate
In an open economy, why is the supply curve for dollars in the foreign-currency exchange market vertical?
Show graphically and explain how increasing import influence exchange rate
Which of the following asserts that the forward exchange rate is equal to the expected future spot exchange rate? a) Purchasing power parity b) Foreign exchange expectations c) Interest rate parity d) International Fisher relationship
How and why will switching from a flexible to fixed exchange rate regime affect exports as a percentage of GDP/ Exports-GDP-ratio
Is a country for which imports and exports comprise a large fraction of the GDP more likely to adopt a flexible exchange rate or a fixed (hard peg) exchange rate?