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Question 54 On behalf of her firm, Amanda H. makes frequent trips to Vietnam. She notices that she always has to pay more dollars to obtain enough local currency to get her nails done in Vietnam than she has to pay to get them done in the United States. This is O consistent with purchasing-power parity if prices in the United States are rising less rapidly than prices in Vietnam. Oirrelevant, as Amanda H. will get her nails done regardless of the price. O inconsistent with purchasing-power parity, but might be explained by limited opportunities for arbitrage in manicuring services across international borders. O consistent with purchasing-power parity if prices in Vietnam are rising more rapidly than prices in the United States.

Question 54 On behalf of her firm, Amanda H. makes frequent trips to Vietnam. She notices that she always has to pay more dollars to obtain enough local currency to get her nails done in Vietnam than she has to pay to get them done in the United States. This is O consistent with purchasing-power parity if prices in the United States are rising less rapidly than prices in Vietnam. Oirrelevant, as Amanda H. will get her nails done regardless of the price. O inconsistent with purchasing-power parity, but might be explained by limited opportunities for arbitrage in manicuring services across international borders. O consistent with purchasing-power parity if prices in Vietnam are rising more rapidly than prices in the United States.

ENGR.ECONOMIC ANALYSIS
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 54 On behalf of her firm, Amanda H. makes frequent trips to Vietnam. She notices that she always has to pay more dollars to obtain enough local currency to get her nails done in Vietnam than she has to pay to get them done in the United States. This is consistent with purchasing-power parity if prices in the United States are rising less rapidly than prices in Vietnam. irrelevant, as Amanda H. will get her nails done regardless of the price. inconsistent with purchasing-power parity, but might be explained by limited opportunities for arbitrage in manicuring services across international borders. O consistent with purchasing-power parity if prices in Vietnam are rising more rapidly than prices in the United States. Question 55 A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is 1.106. If purchasing power parity held the nominal exchange rate would be lower. K O 0.904. If purchasing power parity held the nominal exchange rate would be lower. O 1.106. If purchasing power parity held the nominal exchange rate would be higher. O 0.904. If purchasing power parity held the nominal exchange rate would be higher. 1 nts
Transcribed Image Text:Question 54 On behalf of her firm, Amanda H. makes frequent trips to Vietnam. She notices that she always has to pay more dollars to obtain enough local currency to get her nails done in Vietnam than she has to pay to get them done in the United States. This is consistent with purchasing-power parity if prices in the United States are rising less rapidly than prices in Vietnam. irrelevant, as Amanda H. will get her nails done regardless of the price. inconsistent with purchasing-power parity, but might be explained by limited opportunities for arbitrage in manicuring services across international borders. O consistent with purchasing-power parity if prices in Vietnam are rising more rapidly than prices in the United States. Question 55 A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is 1.106. If purchasing power parity held the nominal exchange rate would be lower. K O 0.904. If purchasing power parity held the nominal exchange rate would be lower. O 1.106. If purchasing power parity held the nominal exchange rate would be higher. O 0.904. If purchasing power parity held the nominal exchange rate would be higher. 1 nts
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