Question 1

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Accepted Answer

The answer of A pound of steak costs $10 in...

Question 2

The nominal exchange rate is 8.5 Moroccan dirham per dollar.The price of a bushel of wheat in Morocco is 85 dirham in Morocco and $7 in the U.S.
A.What is the real exchange rate? Show your work.
B.Can arbitragers make a profit?
C.If your answer to B is yes,where would arbitragers buy and where would they sell.

Accepted Answer

The answer of The nominal exchange rate is 8.5 Moroccan...

Question 3

Assuming purchasing power parity holds and that over a period of five years the dollar had appreciated relative to the currency of Country X,what would explain the appreciation of the dollar?

Accepted Answer

The answer of Assuming purchasing power parity holds and that...

Question 4

In the U.S.a box of tea costs $5.The same box of tea in Uganda costs 10,000 schillings (the currency of Uganda).If the real exchange rate is 5/4,what is the nominal exchange rate? Show your work.

Accepted Answer

The answer of In the U.S.a box of tea costs...

Question 5

During 2011 the inflation rate in Brazil was about 6.6% while in the U.S.it was about 3.3%.At the start of 2011 the nominal exchange rate was about 1.7 Brazilian real per U.S.dollar.
If purchasing power parity holds,about what should the nominal exchange rate have been at the end of 2011? Show your work.

Accepted Answer

The answer of During 2011 the inflation rate in Brazil...

Question 6

The nominal exchange rate is 90 Pakistani rupees per dollar.The price of a shirt in Pakistan is 1800 rupees.The same shirt sells for $25 in the U.S.
A.What is the real exchange rate? Show your work.
B.Can arbitragers make a profit?
C.If your answer to C is yes,where would they buy and where would they sell?

Accepted Answer

The answer of The nominal exchange rate is 90 Pakistani...

Question 7

The price level in Country A is 250.The price level in Country B is 300.If purchasing power parity holds,what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Accepted Answer

The answer of The price level in Country A is...

Question 8

The nominal exchange rate is 3 Malaysian ringgits per dollar.The real exchange rate is 8/5.If a Big Mac costs 7.5 ringgits in Malaysia,how much does a Big Mac cost in the U.S.? Show your work.

Accepted Answer

The answer of The nominal exchange rate is 3 Malaysian...

Quiz 31: Open-Economy Macroeconomic Models

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Assuming purchasing power parity holds and that over a period of five years the dollar had appreciated relative to the currency of Country X,what would explain the appreciation of the dollar?

In the U.S.a box of tea costs $5.The same box of tea in Uganda costs 10,000 schillings (the currency of Uganda).If the real exchange rate is 5/4,what is the nominal exchange rate? Show your work.

The price level in Country A is 250.The price level in Country B is 300.If purchasing power parity holds,what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

The nominal exchange rate is 3 Malaysian ringgits per dollar.The real exchange rate is 8/5.If a Big Mac costs 7.5 ringgits in Malaysia,how much does a Big Mac cost in the U.S.? Show your work.