ECN 438 Final Exam Questions and Answers 100% Pass
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Course
ECN 438
Institution
ECN 438
ECN 438 Final Exam Questions and Answers
100% Pass
Exchange rates are expressed as: - answerthe price of one unit of foreign currency expressed in
terms of the domestic currency.
A term that categorizes patterns of exchange rate behavior is known as: - answerexchange rate
regimes
The interest...
inflation within the sector of the Mexican economy that produces traded goods has been only 3%
per year. In the US, there has been a uniform rate of inflation throughout the economy of 2% per
year. Given this information, which of the following statements is most consistent with PPP
theory? - answer✔Nominal peso per dollar rate = increase by 1%, real peso per dollar rate =
decrease by 5%.
E: nominal exchange rate between the S. Korean won and Japanese yen (won per yen). q:
represents the real exchange rate, measure as the price of Japanese goods relative to S. Korean
goods. According to PPP, which of the following would happen if the only difference between
the economies of the two countries was that S. Korea had more general price inflation than did
Japan? - answer✔E would increase and q would not change.
From 1950-1970, Germany pegged or fixed its currency (the mark) against the US dollar. Over
this period, the average annual rate of inflation in the US was 3%. Because of the rapid
improvements in labor productivity within the German manufacturing sector, the real mark per
dollar exchange rate fell at an average rate of 2% per year. Given all of this information, what
must have been the average inflation rate in Germany over this period? - answer✔=2-3 = 5%
inflation rate in Germany.
E represents the nominal exchange rate between the S. Korean won and the Japanese yen,
measured as won per yen. The symbol q represents the real exchange rate, measured as the price
of Japanese goods relative to (divided by) the price of S. Korean goods. According to PPP,
which of the following would happen if the two countries had the same overall inflation rate, but
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