Economics

Suppose the exchange rates between the United States and Canada are in

Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S. and Canadian rates of inflation would A) have no effect on nominal exchange rates. B) be completely offset by changes […]

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Date: September 10th, 2020

To answer the following question, please refer to the figure below. Co

To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation. What will be an ideal response?   ANSWER Lower right quadrant shows the equilibrium in the U.S. Money Market, where = / A given interest rate R1$ […]

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Date: September 10th, 2020

The evidence cited in the chapter using the examples of the East Asia

The evidence cited in the chapter using the examples of the East Asia New Industrializing Countries suggests that as international productivities converge, so do international wage levels. Why do you suppose this happened for the East Asian NICs? In light of your answer, what do you think is likely to happen to the relative wages […]

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Date: September 10th, 2020

Under fixed rates, which one of the following statements is the MOST a

Under fixed rates, which one of the following statements is the MOST accurate? A) Monetary policy can affect only output. B) Monetary policy can affect only employment. C) Monetary policy can affect only international reserves. D) Monetary policy can not affect international reserves. E) Monetary policy can only affect money supply.   ANSWER C

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Date: September 10th, 2020

Which of the following is a FALSE statement concerning purchasing powe

Which of the following is a FALSE statement concerning purchasing power parity? A) Purchasing power parity states that dollars will tend to exchange for pounds at a rate that maintains a constant purchasing power of a given quantity of a currency. B) Over the long term, a Big Mac in New York will tend to […]

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Date: September 10th, 2020