The United States and China can produce TVs at $200 and 2000 yuan each. One day of labor is needed to produce a TV in the United States and 10 days of labor are needed to produce a TV in China. Each country also produces the nontraded good, car washing. In each country, one car can be washed in one day. The exchange rate is 10 yuan = $1. If trade costs are zero, what is the daily wage in the United States?
A) $2000
B) $200
C) $100
D) $150
Correct Answer:
Verified
Q35: Country A is experiencing productivity growth. When
Q36: Country A has higher productivity in traded
Q37: The United States and China can produce
Q38: (Table: The Big Mac Index) The PPP
Q39: The percentage change in the real exchange
Q41: The Balassa-Samuelson forecast predicted that Argentina's overvalued
Q42: When a nation's currency is different from
Q43: If the real exchange rate is higher
Q44: If UIP holds, then returns on foreign
Q45: The Balassa-Samuelson forecast can be used to
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents