EBK MINDTAP ECONOMICS FOR BOYES/MELVIN'
10th Edition
ISBN: 9781305387614
Author: MELVIN
Publisher: VST
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Question
Chapter 9, Problem 10E
To determine
(a)
To write:
Disposable income rises by $100, and consumption by $75. The value of marginal propensity to consume.
To determine
(b)
To write:
Disposable income falls by $100 and consumption falls be $50. The value of marginal propensity to consume.
To determine
(c)
To write:
Savings is $20 when disposable income is $100; savings is $40 when disposable income is $300. The value of marginal propensity to consume.
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In this question, you will test relative purchasing parity (PPP) using the data. Use yearly
data from FRED website
from 1971 to 2020: (i) The Canadian Dollars to U.S. Dollar Spot
Exchange Rate (ER) (ii) Consumer price index for Canada (CAN_CPI), and (iii) Consumer price
index for the US (US_CPI). Inflation is measured by the consumer price index (CPI). The relative
PPP equation is:
AE CAN$/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
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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.
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Show at least two decimal places, as in x.xx%
%
Chapter 9 Solutions
EBK MINDTAP ECONOMICS FOR BOYES/MELVIN'
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