If the foreign currency equivalent of the domestic price of a commodity is more than the foreign price of the same commodity, then the LOP implies that the foreign currency is overvalued. the foreign currency is undervalued. the domestic currency is undervalued. a) and c) none of the above.
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the foreign currency is overvalued.
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the foreign currency is undervalued.
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the domestic currency is undervalued.
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a) and c)
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none of the above.
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- Suppose the MXN (spot) devalued by 15%, the hotel room in Mexico would now sell for __________Mexican Pesos which would equal ___________US dollars. $1=20.1212 MXN (spot) 1/20.1212= > 1 MXN= 0.0497 $S1: The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. S2: When the demand of foreign currency is greater than its supply, the currency becomes more valuable. A. both are true B. both are false C. S1 is true D. S2 is trueThe inflation rate is expected to be 8% per year into the foreseeable future. How many years will it take for the peso's purchasing power to be one-half off what it is now? Using this formula F=P(1+f)^n.
- No1 ) Rob works as a loan officer for a major U.S. commercial bank, specializing in international loans. When considering loans to governments and businesses in other nations, Rob Multiple Choice must be aware of federal limits on the total amount of U.S. funds his bank can lend to foreign borrowers. can only make loans if his bank has funds in excess of those sought by American firms. is likely to approve loans to foreign borrowers if the return is high enough to justify the risk. must increase the dollar volume of loans they make to customers. must pay more to borrow from the Fed. have fewer funds available for lending. will find their balance sheets temporarily out of balance. must be careful to get approval from the International Monetary Fund. No. 2) When the Fed increases the reserve requirement, banks Multiple Choice must increase the dollar volume of loans they make to customers. must pay more to borrow from the Fed.…assume that initially, PPP holds, if the inflation rate in your country falls relative to the inflation rate in the United States. The domestic currency is ______ and will ________. select one a. overvalued; appreciate b. undervalued; appreciate c. overvalued; depreciate d. undervalued; depreciate e. remain unchangedThis is not a writing assignment, this is a multiple-choice question Which of the below is NOT a factor determining the demand for a currency such as the U.S. dollar? Group of answer choices All else equal, the greater demand for a country's exports will cause its currency to appreciate. All else equal, foreign capital is attracted by emerging economies with unstable political history and greater volatility in their financial and stocks markets. All else equal, higher real interest rates offered in the U.S. will make it lucrative for foreign investors to purchase U.S. bonds that pay a higher interest rate. Foreigners will need to purchase U.S. dollars to purchase U.S. treasuries. A country with a booming economy will often have a currency that is appreciating. Strong growth presents economic investment opportunities and attracts financial capital from other countries. If the country in question is the U.S. then the infow of foreign financial capital must be converted to U.S.…
- If in a given year the indexes of prices received and paid by farmers were 120 and 165, respectively, what would the parity ratio be? Explain the meaning of that ratio.The USD vs. GBP exchange rate is $1.50 vs. £1. A UK MNC operating in the US plans to sell goods worth $100 mil- lion at today’s prices to US customers. Show that its GBP revenue in r eal terms will not be affected if PPP applies under each of the following conditions: (i) UK and US inflation at 5% p.a. (ii) UK inflation 5%, US inflation 2%. (iii) UK inflation 2%, US inflation 5%.Assume the exchange rate is 20 pesos for a dollar. The dollar is expected to depreciate to 15 pesos for a dollar. An investor exchanges an unspecified amount of dollars for pesos. Then, once the dollar has depreciated, the investor converts his pesos into dollars. The investor earns a profit of $7. The original amount of dollars exchanged for pesos was
- Assume UK inflation rate falls relative to US inflation rate. Other things being equal, how should this affect the (a) UK demand for Dollars, (b) supply of Dollars for sale, and (c) equilibrium value of Dollars? (Indicate with a single graph). Which currency is going to appreciate in this regard?An inflation rate of 7 percent would erode the purchasing power of the dollar by A). 6.5 B) 3.5 C) 7 D) 14.3fast plz 28- Which of the following increases the supply of foreign exchange? a. Import of goods and services to a country b. Investments of capital in foreign countries c. Increases in tourism and export of local goods d. Demand for foreign goods and services