ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 20, Problem 4.7P
To determine
The managed float system and its benefits over the freely floating exchange rate system.
Concept Introduction:
The method by which the currency of a country is regulated by its authority in accordance with other countries currencies and foreign exchange markets is known as Exchange rate regime. Many standards of exchange rates have prevailed thus far in the world economy such as gold standard, Bretton-Wood standard and currently the managed float standard.
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Students have asked these similar questions
The nominal exchange rate of the Australian dollar is 0.67. The CPI in the US is 300 and the same basket costs 430 in Australia.
(a) What can you say about the purchasing power parity holding for Australia? Show calculation.
Answer: 0.96
(b) The nominal Australian GDP is $1.5 trillion. Find Australia’s purchasing power parity GDP. Which one is more relevant for most purposes? What is the other one used for?
Answer:1.56
5----
On June 23, 2016, citizens of the United Kingdom voted in favor of a referendum to leave the European Union. The table below shows
the exchange rate between the U.S. dollar and the British pound 4 months before and 4 months after the vote. Complete the table,
giving all answers to three decimals.
Date
February 23, 2016
June 23, 2016
October, 23, 2016
Exchange Rates Between the U.S. Dollar and the British Pound
Units of foreign currency you can Number of U.S. dollars required to buy one
buy with 1 U.S. dollar
unit of the foreign currency
0.713
0.671
1.22
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