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- The UK inflation rate is predicted to be 15% and the Euroland inflation rate is predicted to be 5%. The current Euro/£ exchange rate is 1.60 Euros per pound. What is the expected Euro/£ rate in one year’s time according to PPP?A US based exporter sells US made goods in UK. The revenue last year was £1,000. The cost of goods was $800. The spot exchange rate was $1.25 per £. What was the profit in dollars? $400 $300 $250. Pls sir very fastFor a European investor, what is the rate of return in euro on: “a ¥10,000 deposit in a Japanese bank in a year when the interest rate on Yen is 12 % and the Yen per euros exchange rate moves from ¥1.40 per euros to ¥1.20 per euros” A. Compute the rate of return without the formula B. Compute the approximation of this rate of return using the formula Only typed answer
- ArtTech exports a specialized machine part to Japan. The price set in Japan is ¥120,000 and the cost incurred in the US is $800. The current exchange rate is ¥120 per dollar. Over a year the inflation rate in US is 2% and the inflation rate in Japan is 1%. The price in Japan increases with the local inflation rate and the cost in the US increases by the US inflation rate. What will be the percentage change in the profit per unit one year later if the exchange rate did not change? [First compute the profit before and after the price/cost changes due to inflation.] -1% -2% -3% If the market exchange rate remains constant while the PPP based exchange rate rises (for rates quoted as dollars per pound) the real exchange rate (dollars per pound) will: Increase Decrease If the nominal exchange rate (dollars per pound) remains constant and the inflation in UK is greater than the inflation rate in the US we can conclude that:…(a) Definite Purchasing Power Parity with quoted example. Please give explanation in details with example. (b) Evaluate the factors cost Purchasing Power Parity failed. Please give explanation in details with example.Many developing countries, like Mexico, have moderate to high rates of inflation. At the same time, international trade plays an Important role In their economies. What type of exchange rate regime would be best for such a countrys currency vis Ă´ vis the U.S. dollar?
- Given the following: The population of a country is 4.2 million. The GNP in million $ is 6132. In the local currency (the sucres S) the per capita income is 159140 S. Calculate the exchange rate for this situation.A South American country has had a high rate of inflation. Recently, its exchange rate was 15 cruzados per dollar; that is, one dollar will buy 15 cruzados. It is likely that the country will continue to experience a 25% inflation rate and that the U.S. will continue at a 3% inflation rate. Assume that the exchange rate will vary the same as the inflation. In this situation, one dollar will buy how many cruzados 5 years from now?How would each item be counted in the US balance of payments? Give sign, category (e.g. export, FDI, income flow, etc.) and account (CA, FA or OR).
- As on November 3, 2021 One US Dollar (USD) sells for 1.24 Canadian Dollar (CAD). Which are the factors or authorities responsible for maintaining these currency exchange rates?The USA interest rate is 5% and the nominal exchange rate between the euro and the US dollar, E€/$, is 0.94. As the Ukraine crisis continues and the price of energy is expected to increase further, the financial markets expect a 14% depreciation of the euro in the following year. How much (euro) will a European investor earn, if today she invests 1 euro in a one-year USA bond?D2 The Steel was sold $650 / ton in the U.S.; the same type of steel was sold for Euro 400/ton. If the nominal exchange rate between Euro and dollar is $1.12/Euro, what is the real exchange rate between U.S. steel and European Steel? Which currency is overvalued (given a brief reason for your thought based on purchasing power parity)?
