Provide short answers: Assume the consumer price index in France rises from 250 at the end of the year to 265 at the end of the next year, how much inflation was there in France during that year? Describe the difference between a price level and a price index. Outline the theory of absolute purchasing power parity. During our discussion of absolute purchasing power parity we frequently referred to the law of one price. Write a short note on the logic of the law of one price and consider why this condition may be violated.
Provide short answers: Assume the consumer price index in France rises from 250 at the end of the year to 265 at the end of the next year, how much inflation was there in France during that year? Describe the difference between a price level and a price index. Outline the theory of absolute purchasing power parity. During our discussion of absolute purchasing power parity we frequently referred to the law of one price. Write a short note on the logic of the law of one price and consider why this condition may be violated.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter20: International Finance
Section: Chapter Questions
Problem 5QFR
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Question One
Provide short answers:
- Assume the
consumer price index in France rises from 250 at the end of the year to 265 at the end of the next year, how much inflation was there in France during that year? - Describe the difference between a price level and a price index.
- Outline the theory of absolute
purchasing power parity. - During our discussion of absolute purchasing power parity we frequently referred to the law of one price. Write a short note on the logic of the law of one price and consider why this condition may be violated.
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