If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long-run exchange rate must be 1. A. 2 pounds per dollar. B. 2.5 dollars per pound. C. 1.5 pounds per dollar. D. 1.8 dollars per pound. E. None of the above. Which of the following is an assumption of the monetary approach to the exchange rates? 2. A. Purchasing power parity (PPP) holds. B. Uncovered interest parity (UIRP) holds. C. Prices are flexible. D. All of the above. E. Only A and C of the above. Use the following information to answer questions 3 - 5. Consider the following economy:
If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long-run exchange rate must be 1. A. 2 pounds per dollar. B. 2.5 dollars per pound. C. 1.5 pounds per dollar. D. 1.8 dollars per pound. E. None of the above. Which of the following is an assumption of the monetary approach to the exchange rates? 2. A. Purchasing power parity (PPP) holds. B. Uncovered interest parity (UIRP) holds. C. Prices are flexible. D. All of the above. E. Only A and C of the above. Use the following information to answer questions 3 - 5. Consider the following economy:
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Open-economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 7PA
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