Study Guide for Mankiw's Principles of Microeconomics, 7th
7th Edition
ISBN: 9781285864242
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 19, Problem 6PA
To determine
The effect of superstar phenomenon.
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not use ai please
not use ai please
In this question, you will test relative purchasing parity (PPP) using the data. Use yearly
data from FRED website
from 1971 to 2020: (i) The Canadian Dollars to U.S. Dollar Spot
Exchange Rate (ER) (ii) Consumer price index for Canada (CAN_CPI), and (iii) Consumer price
index for the US (US_CPI). Inflation is measured by the consumer price index (CPI). The relative
PPP equation is:
AE CAN$/US$
ECAN$/US$
=
π CAN - πUS
Submit the Excel sheet that you worked on.
1. First, compute the percentage change in the exchange rate (left-hand side of the equation).
Caculate the variable for each year from 1972 to 2020 in Column E (named Change_ER) of
the Excel sheet. For example, for 1972, compute
E3: (B3-B2)/B2).
ER1972 ER1971
ER 1971
(in Excel, the formula in cell
Chapter 19 Solutions
Study Guide for Mankiw's Principles of Microeconomics, 7th
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- not use ai pleasearrow_forward8. The current price of 3M stock is $87 per share. The previous dividend paid was $5.96, and the next dividend is $6.25, assuming a growth rate of 4.86% per year. What is the forward (next 12 months) dividend yield? Show at least two decimal places, as in x.xx% %arrow_forwardJoy's Frozen Yogurt shops have enjoyed rapid growth in northeastern states in recent years. From the analysis of Joy's various outlets, it was found that the demand curve follows this pattern: Q=200-300P+1201 +657-250A +400A; where Q = number of cups served per week P = average price paid for each cup I = per capita income in the given market (thousands) Taverage outdoor temperature A competition's monthly advertising expenditures (thousands) = A; = Joy's own monthly advertising expenditures (thousands) One of the outlets has the following conditions: P = 1.50, I = 10, T = 60, A₁ = 15, A; = 10 1. Estimate the number of cups served per week by this outlet. Also determine the outlet's demand curve. 2. What would be the effect of a $5,000 increase in the competitor's advertising expenditure? Illustrate the effect on the outlet's demand curve. 3. What would Joy's advertising expenditure have to be to counteract this effect?arrow_forward
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