Exam 18: Open Economy Macroeconomics Basic Concepts: A First Theory of Exchange-Rate Determination Purchasing-Power Parity

Suppose a Starbucks tall latte costs $4.00 in the United States and 2.50 euros in the Euro area.Also,suppose a McDonald's Big Mac costs $4.50 in the United States and 3.60 euros in the Euro area.If the nominal exchange rate is .80 euros per dollar,which goods have prices that are consistent with purchasing-power parity?

If purchasing-power parity holds,a bushel of rice costs $10 in the U.S. ,and the nominal exchange rate is 25 Thai baht per dollar,what is the price of rice in Thailand?

According to the doctrine of purchasing-power parity,which of the following should depreciate if over the next year the inflation rate is higher in the U.S.than in the Euro area?

Prices in both the U.S.and China rise,but prices in China increase by a larger percentage.According to purchasing-power parity,the U.S.dollar

According to purchasing-power parity,if the same basket of goods costs $100 in the U.S.and 50 pounds in Britain,then what is the nominal exchange rate?

If a dollar buys more rice in the China.than in the U.S. ,then

If the Kenyan nominal exchange rate declines,and prices are unchanged in Kenya and abroad,then the Kenyan real exchange rate

According to purchasing-power parity,if over the course of a year the price level in the U.S.rises more than in Canada,then which of the following rises?

A tall latte in China costs 30 yuan.The same latte in the U.S.costs 4 dollars.If the exchange rate is 6.5 yuan per dollar then,the real exchange rate is

According to purchasing-power parity,if the price of a basket of goods in the U.S.rose from $1,500 to $2,000 and the price of the same basket of goods rose from 600 units of some other country's currency to 1,000 units of that country's currency,then the

A basket of goods cost $800 in the U.S.The same basket of goods costs $1,000 in France and the exchange rate is .80 euros per dollar.The same basket of goods costs 960 Australian dollars and the exchange rate is 1.2 Australian dollars per U.S.dollar.Purchasing power parity with the U.S.holds in

If the dollar buys fewer bananas in Guatemala than in Honduras,then traders could make a profit by

A Big Mac in Japan costs 400 yen while it costs $4.50 in the U.S..The nominal exchange rate is 100 yen per dollar.Which of the following would both make the real exchange rate move towards purchasing-power parity?

An MP3 player in Singapore costs 200 Singaporean dollars.In the U.S.it costs 100 US dollars.What is the nominal exchange rate if purchasing-power parity holds?

If purchasing-power parity holds,then the value of the

According to purchasing-power parity,if the price of a basket of goods in the U.S.rose from $2,000 to $2,104 and the price of the same basket of goods rose from 800 units to 832 units of some other country's currency,then the

The nominal exchange rate is about 2 Aruban florin per dollar.If a basket of goods in the United States costs $40,how many florins must a basket of goods in Aruba cost for purchasing-power parity to hold?

If P = domestic prices,P* = foreign prices,and e is the nominal exchange rate,which of the following is implied by purchasing-power parity?

The ability to profit by purchasing wheat in the U.S.and selling it in China implies that the

Suppose a McDonalds Big Mac costs $4.40 in the United States and 3.30 euros in the euro area and 5.72 Australian dollars in Australia.If exchange rates are .75 euros per dollar and 1.3 Australian dollars per dollar,where does purchasing-power parity hold?