MANKIW: PRINCIPLES OF MACROECONOMICS
8th Edition
ISBN: 9781337801782
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 18, Problem 5CQQ
To determine
Exchange rate between Paris and New York.
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Students have asked these similar questions
1 Suppose that two countries, Indonesia and Vietnam, produce coffee. The currency unit used in Indonesia is the Rupiah (IDR). The currency unit used in Vietnam is the Dong (VND). In Vietnam, coffee sells for 4,500 dong (VND) per pound. The exchange rate is 1.57 VND per 1 IDR, EVND/IDR = 1.57.
2 If the law of one price holds, what is the price of coffee in Indonesia, measured in Rupiah (assume we are talking about the same type of coffee)? Please round your answer to the nearest whole number.
Assume the price of coffee in Indonesia is actually 3000 IDR per pound. Compute the relative price of coffee in Indonesia versus Vietnam (round your answer to 2 decimal places). Where will coffee traders buy coffee? Where will they sell coffee in this case? How will these transactions affect the price of coffee in Vietnam? In Indonesia?
Given the definition of the exchange rate , if the Canadian dollar is the domestic currency and US dollar the foreign currency, what does a nominal exchange rate of 1.15 means?
Year
2014
2015
2016
US $
$1
$1
$1
British Pound
0.85
0.70
0.60
Based on the Exchange rates above, How might international trade be affected?
A)It is cheaper for American to travel to EnglandB)The US will import more from EnglandC)England will export more to the USD)England will import more from the US
Chapter 18 Solutions
MANKIW: PRINCIPLES OF MACROECONOMICS
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