ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 4, Problem 3.5P
To determine
The law of supply with the help of an example and to state the relationship between the law of supply and the supply curve.
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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
not use ai please
8. 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%
%
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