Question 1Appreciation vs. Depreciation: You are given the following information regarding the nominal exchange rate between the USD and the Indian rupee (INR):Wednesday: INR 65 per USD 1Thursday: INR 78 per USD 1Friday: INR 74 per USD 1Is it possible for any two currencies (e.g., the Canadian dollar-CAD and the Egyptian pound-EGP) to simultaneously appreciate relative to one another? Explain.The average price for a 16” pepperoni pizza in the U.S. is USD 10. The average price for a similar pizza in Ukraine is UAH 28. The nominal exchange rate is UAH 28 to USD 1.From the U.S. perspective, what is the real exchange rate for pizza between the U.S. and Ukraine? In other words, how many 16” pepperoni pizzas can you afford in Ukraine for what it costs to buy a similar pizza in the U.S.? (Show all work for full credit.)

Answered: From the U.S. perspective, what is the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 1

Appreciation vs. Depreciation: You are given the following information regarding the nominal exchange rate between the USD and the Indian rupee (INR):

Wednesday: INR 65 per USD 1

Thursday: INR 78 per USD 1

Friday: INR 74 per USD 1

Is it possible for any two currencies (e.g., the Canadian dollar-CAD and the Egyptian pound-EGP) to simultaneously appreciate relative to one another? Explain.

The average price for a 16” pepperoni pizza in the U.S. is USD 10. The average price for a similar pizza in Ukraine is UAH 28. The nominal exchange rate is UAH 28 to USD 1.

From the U.S. perspective, what is the real exchange rate for pizza between the U.S. and Ukraine? In other words, how many 16” pepperoni pizzas can you afford in Ukraine for what it costs to buy a similar pizza in the U.S.? (Show all work for full credit.)

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