Suppose a Big Mac sandwich sells for 2.50 US Dollars in the United States and for 400 Yens in Japan. Which nominal exchange rate is consistent with the Law of One Price? 120 yens for US$1. 160 yens for US$1. 160 yens for US$2.50. 120 yens for US$120.
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- In France, one kilogram of macadamia nuts costs 10.5Euro and 10 Dollars in Canadian in Canada. According to the law of one price, the expected exchange rate between the Euro and the Canadian would be_____ 1.5Euro/$ 0.12Dollar/Euro 1.67 Dollar/Euro 0.67 Euro/DollarCoffee grown in Guatemala is priced at 17 Guatemalan quetzal per pound (Guatemalan quetzal, or GTQ, is the currency of Guatemala). Comparable coffee grown in the U.S. is priced at $8.40 per pound. One Guatemalan quetzal trades for $0.13 in the foreign exchange market. Find the real exchange rate from the perspective of the United States and from the perspective of Guatemala, and determine which country's coffee is more competitively priced? Instructions: Enter your responses rounded to two decimal places. Real exchange rate from the perspective of the U.S. is Real exchange rate from the perspective of Guatemala is Coffee is more competitively priced in [Guatemala VView the data below for the exchange rate between the US dollar and the Japanese yen. How many yen could you get per dollar at the earliest date shown on the chart? Explain. How many yen could you get per dollar at the most recent date shown on the chart? Explain. Has the dollar appreciated or depreciated in value over time? Explain.
- Coffee grown in Guatemala is priced at 19 Guatemalan quetzal per pound (Guatemalan quetzal, or GTQ, is the currency of Guatemala). Comparable coffee grown in the U.S. is priced at $6.20 per pound. One Guatemalan quetzal trades for $0.13 in the foreign exchange market. Find the real exchange rate from the perspective of the United States and from the perspective of Guatemala, and determine which country's coffee is more competitively priced? Instructions: Enter your responses rounded to two decimal places. Real exchange rate from the perspective of the U.S. is ☐ Real exchange rate from the perspective of Guatemala is Coffee is more competitively priced in (Click to select)Suppose that yesterday, the U.S. dollar-Japanese yen exchange rate was $1=¥0.553546. The price of one Japanese yen in terms of a U.S. dollar was ___ . Suppose that today the U.S. dollar-Japanese yen exchange rate falls to $1=¥0.533585 for one dollar. This means that between yesterday and today, the U.S. dollar has ___ against the Japanese yen. The price of a Mexican peso in terms of the U.S. dollar is now ___ .Assume that in the United States $1,000 wíll buy the same basket of goods that 20,000 pesos will buy in Mexico. The U.S. dollar/Mexican Peso exchange rate is $0.04 per peso. (a) Is the U.S. dollar overvalued or undervalued? Please explain. (b) Is the Mexican Peso overvalued or undervalued? Please explain. Consider the Purchasing Power Parity theory in your answer. (Only accept typing answers) (Only accept typing answers) (Only accept typing answers)
- In mid-2006, a British pound sterling (the monetary unit in the United Kingdom) was worth 1.4 euros (the monetary unit in the European Union). If a U.S. dollar bought 0.55 pound sterling in 2006, what was the exchange rate between the U.S. dollar and the euro?It costs 100 GBP to buy a certain basket of goods in the UK. It costs 200 USD to buy the same basket in the US. 1 year deposit rates are 10% in both countries. Everyone expects these numbers to remain the same indefinitely. What is the current exchange rate between USD and GBP implied by purchasing power parity? What is the current exchange rate between USD and GBP implied by the overshooting model? Today, the Bank of England announces that it is going to lower the short-term interest rate to 5% in May 2024 and to return it to 10% in May 2025. It also says that the price level will go up and, eventually, it will cost 150 GBP to buy the same basket of goods in the UK. The price adjustment will be completed by May 2026. What is the current exchange rate between USD and GBP implied by the overshooting model? Under the circumstance described in (3), what will be the exchange rate between USD and GBP in May 2024?The euro/dollar exchange rate is 1 euro = $1.20. According to the law of one price, a camera that sells for $240 in New York should sell for how many euros in Germany?
- If a French car costs 10,000 euros, a similar American car costs 15000 dollars, and a euro can buy 1.2 dollars. what is real exchange rates ( you may assume any currency as the “domestic currency”) If a French car costs 10,000 euros, a similar American car costs 15000 dollars, and a euro can buy 1.2 dollars. what is real exchange rates ( you may assume any currency as the “domestic currency”) ???The Big Mac index is used as a rough measure of purchasing power parity across countries. The Economist magazine recently included the Vietnamese dong in its calculation of the Big Mac index. A Big Mac costs $5.06 in the United States but only 60,368 dong or $2.66 in Vietnam (at the current exchange rate). What does this information suggest about the value of the real exchange rate of the U.S. dollar relative to the Vietnamese dong (treating the United States as the domestic economy, so the nominal exchange rate is expressed as dong per dollar)? Is the real exchange rate likely to be greater than or less than 1?Consider the following table of average monthly exchange rates. March 2020 Japanese yen ¥ Euro € Pound sterling £ HK dollar HK$ Thai baht B PHP per unit of foreign currency 0.4731 56.3194 63.0322 6.5552 1.5889 USD per unit of foreign currency 0.0093 1.1064 1.2384 0.1288 0.0312 March 2021 PHP per unit of foreign currency 0.4476 57.8798 67.363 6.2563 1.5812 USD per unit of foreign currency 0.0092 1.1916 1.3868 0.1288 0.0325 A. How many units of Japanese yen do you need to buy P1 in March 2020 and in March 2021? B. How many units of Japanese yen do you need to buy $1 in March 2020 and in March 2021? C. The Philippine peso depreciated against which currencies between March 2020 and March 2021? D. The US dollar appreciated against which currencies between March 2020 and March 2021?