Suppose the price level and value of the U.S. dollar in year 1 are 1 and $1, respectively. Instructions: Enter your answers rounded to 2 decimal places a. If the price level rises to 1.65 in year 2, what is the new value of the dollar? .8 b. If, instead, the price level falls to 0.25, what is the value of the dollar?

Suppose the price level and value of the U.S. dollar in year 1 are 1 and $1, respectively. Instructions: Enter your answers rounded to 2 decimal places a. If the price level rises to 1.65 in year 2, what is the new value of the dollar? .8 b. If, instead, the price level falls to 0.25, what is the value of the dollar?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 24CTQ: Can you think of any major disadvantages to dollarization? How would a central bank work in a...

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Suppose the price level and value of the U. S. dollar in year 1 are 1 and $ 1, respectively. (Round your answers to 2 decimal places) 1) if the price level rises to 1.25 in year 2, what is the new value of the dollar? 2). If, instead, the price level falls to 0.50, what is the value of the dollar?
Suppose the price level and value of the dollar in year 1 are 1 and $1, respectively. If the price level rises to 1.25 in year 2, what is the new value of the dollar? If, instead, the price level falls to .50, what is the value of the dollar? What generalization can you draw from your answers?
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