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Describe the Constant-Dollar Analysis?
The adjusted value of currencies to make the comparison from one period to another is called the Constant dollar. The Constant dollar analysis is the measure to adjust the dollar value in the real terms because due to the inflation the actual worth of dollar changes. If the inflation is higher as compared to the previous year, then the previous year’s dollar value will be less worth than today’s dollar.
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- What is the formula to find the present-worth equivalent of the constant-dollar?In a certain foreign country in 2009, the local currency (the ‘Real’) was pegged to the U.S. dollar at the rate of $1 U.S. = 1 Real. The Real was then devalued over the next five years so that $1 U.S. = 2 Real. A bank in the north-eastern United States bought assets in this country valued at 100 million Real in 2009. Now that it is year 2014, what is the worth of this bank’s investment in U.S.dollars? Should the bank sell out of its investment in this foreign country or should it buy more assets?- Which of the following is not included as one of the component values of an SDR? British Pound U.S. Dollar Japanese Yen Swiss Franc
- Define current yieldWhat is the cross exchange rate of GBP:1.2884 and CHF: 0.9777?Martin Shrood purchased a vacant lot outside of London for £13,500, because he heard that a shopping mall was going to be built on the other side of the road. He figured that he could make a bundle by puttingin a fast-food outlet on the site. As it turned out, the rumor was false. A sanitary landfill was located on the other side of the road, and Martin’s land was worthless. (£ denotes the British monetary unit, pounds sterling.)*Required: With respect to the economic characteristics of costs, what type of cost is the £13,500 that Martin paid for the vacant lot?
- Assume that the level of interest rates is about the same in the US and in the UK. You buy a British pound today at $1.10/pound and sell it after 1 year for $1.17/pound . In this case, you difference in return from holding pounds instead of dollars was a___ of ____. A. loss, 7% B. loss, 6.36 % C. gain , 7 % D. gain, 6.36%Suppose Australia has an annual 6% inflation rate, while the annual growth rate of the nominalexchange rate, expressed in euros per Australian dollar, is 4%. If purchasing power parity holds,what is the annual inflation rate in the Eurozone?A British pound cost $1.56 in U.S. dollars in 1996, but $1.66 in U.S. dollars in 1998. Calculate the cost of a U.S. dollar in terms of British pounds in 1996 and 1998.
- onomics Indicate whether Net Capital Outflows (NCO) will increase (be positive) or decrease (be negative) in each of the following scenarios. Explain your answers. Assume you are living in the Pakistan. Chinese residents buy Pak government bonds Pak receives remittances from abroad Real interest rates changes in Pakistan from 10% to 12% Domestic Investment (I) are greater than National Savings (S) Pak exports cotton to USA worth Rs100 million Pak receives loans from the IMFIf the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets, and if the dollar is expected to appreciate at a 4 percent rate, the expected return on ________-denominated assets in terms of ________ percent. A. euro; euros is 7 B. euro; dollars is 1 C. dollar; dollars is 7 D. dollar; euros is 1How does the NAIBER work and why is it considered an alternative to the NAIRU?
