Answered: If the price index rises from 100 to…

If the price index rises from 100 to 120, then the purchasing power of the dollar will fall by about 10 percent. ○ 13 percent. ○ 17 percent. 20 percent.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 5E

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If the price index rises from 100 to 145, then the purchasing power of the dollar will fall by about Multiple Choice 31 percent. 20 percent. 23 percent. 45 percent.
Which of the following best describes the relationship between inflation and the value of the dollar? A) Inflation increases the value of the dollar while deflation decreases the value of the the dollar. B) Inflation decreases the value of the dollar while deflation increases the value of the dollar. C) Neither inflation nor deflation affect the value of the dollar. D) Both inflation and deflation increase the value of the dollar.
Towards the end of 2009 the pound fell to a six month low of 1.0628 Euros. Figures released by the UK government suggested that demand was still low in the country. The pound was also under downward pressure because of the low value of the interest rate. A recent report suggested these would remain at their historic low of 0.5% until 2014. Business confidence in general remained frail and there was concern over when the UK economy would start to recover from its negative growth. There was huge excess capacity in the UK. In addition the government had a huge deficit which was expected to cause problems with cutbacks and tax increases in the future. Question: Analyze why the pound might have fallen so low towards the end of 2009.
Towards the end of 2009 the pound fell to a six month low of 1.0628 Euros. Figures released by the UK government suggested that demand was still low in the country. The pound was also under downward pressure because of the low value of the interest rate. A recent report suggested these would remain at their historic low of 0.5% until 2014. Business confidence in general remained frail and there was concern over when the UK economy would start to recover from its negative growth. There was huge excess capacity in the UK. In addition the government had a huge deficit which was expected to cause problems with cutbacks and tax increases in the future. Questions Explain what determines the value of a currency. Analyze why the pound might have fallen so low towards the end of 2009. Analyze the possible effects on the UK economy of a fall in the value of the currency.
This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…
This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…
This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…
This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…
Suppose Greenland wants stuffed toy beavers from Canada. This will mean the demand for the Canadian dollar will Question 45 options: increase; increase and the supply of the Danish krone, the currency used in Greenland, will decrease; decrease increase; decrease decrease; increase
suppose expected inflation is 4% in the united kingdom and 1 % in the united states . if the relative ppp holds , the market would expect the paund to (a) deapreciate by 3% against the dollar (b) deapreciate by 8% against the dollar (c) appreciate by 3% against the dollar (d) appreciate by 5% against the dollar
Select all statements from below that accurately describe shifts in the supply or demand of the Australian dollar (AUD): Group of answer choices American consumers increase their demand for stainless steel appliances, resulting in greater Australian exports of iron ore. This causes the demand curve for the AUD to shift to the right. Australian restauranteurs increase their imports of spices from India, shifting the supply curve of the AUD to the right. Temperatures in Japan rise, leading to a decrease in Australian wool exports to that nation. This causes the supply curve of the AUD to shift left. Senegal opens its markets to import Australian goat/sheep meat. This causes the demand curve of the AUD to shift left. Mongolian manufacturers switch their primary supplier of aluminum oxide from China to Russia, causing the supply curve of the AUD to decrease.
Assume that the government decreases its spending on discretionary budget programs. All else constant, how will the change in national income affect U.S. demand for imported goods and thus the value of the dollar? Demand for imports will be unchanged; the dollar will appreciate. Demand for imports will decrease; the dollar will depreciate. Demand for imports will decrease; the dollar will appreciate. Demand for imports will increase; the dollar will depreciate. Demand for imports will increase; the dollar will appreciate.