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Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884 Exercise 2
Exchange Rate Fluctuations
Use the following information to work Problem.
Brazil's Overvalued Real
The Brazilian real has appreciated 33 percent against the U.S. dollar and has pushed up the price of a Big Mac in Sao Paulo to $4.60, higher than the New York price of $3.99. Despite Brazil's interest rate being at 8.75 percent a year compared to the U.S. interest rate at near zero, foreign funds flowing into Brazil surged in October.
Does purchasing power parity holdIf not, does PPP predict that the Brazilian real will appreciate or depreciate against the U.S. dollarExplain.
Use the following information to work Problem.
Brazil's Overvalued Real
The Brazilian real has appreciated 33 percent against the U.S. dollar and has pushed up the price of a Big Mac in Sao Paulo to $4.60, higher than the New York price of $3.99. Despite Brazil's interest rate being at 8.75 percent a year compared to the U.S. interest rate at near zero, foreign funds flowing into Brazil surged in October.
Does purchasing power parity holdIf not, does PPP predict that the Brazilian real will appreciate or depreciate against the U.S. dollarExplain.
Explanation
Verified
Verified
The real exchange rate between exchange ...
Macroeconomics 11th Edition by Michael Parkin
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