The exchange rate is 0.8 USD per CAD and is expected to decrease to 0.78. The expected US rate of inflation is 0.045. Use the relative PPP to find what inflation the market expects for Canada.
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1. The exchange rate is 0.8 USD per CAD and is expected to decrease to 0.78. The expected US rate of inflation is 0.045. Use the relative PPP to find what inflation the market expects for Canada.
2. The interest rate in the US is 7%. Use the Fisher effect to find the Canadian interest rate.
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- "When there is low inflation, it will be backed by low interest and an appreciated currency and not depreciated currency." Isn't this statement wrong as inflation and interest rates have an inverse relationship.Suppose that the central bank in the UK (The Bank of England) decides to raise interest rates because it is worried about high inflation. As a result, interest rates in the UK become higher than interest rates in the REST OF EUROPE. This acts as an incentive for EUROPEAN investors to increase the amount of funds they invest in British (UK) interest bearing assets. In order to increase their purchases of those UK assets, which are priced in PST, EUROPEAN investors have to convert EUR into PST. This conversion, in turn, increases the demand for PST. Based on the above information, please explain what will happen to the EUR–‐‑PST exchange rate. In other words, will the increased demand for PST, make PST gain value (appreciate. In 2019, the exchange rate was ¥6.74=$1. Convert the China GDP of ¥99,086.5 billion yuan in 2019 with the U.S. GDP of $21,430 trillion for the same year.
- This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…
- This question relates to the following news article New Zealand dollar drops to lowest value against US dollar since 2020 (27/09/2022) The New Zealand dollar has dropped to its lowest value against its US equivalent since March 2020. The bad news for Kiwis is that it means it'll take longer for consumer price inflation to fall. ...a weak Kiwi dollar means importing is more expensive. "While we do expect inflation rates to slowly fall from here, the longer the New Zealand dollar remains low. the slower it will take for those inflation rates to fall." ASB senior economist Mark Smith said. Six months ago the New Zealand dollar was US68.9c - now it's at US56.6c, a fall of 18 percent. Aotearoa's dollar is suffering because the US dollar is being pumped up by the US Federal Reserve lifting interest rates to tackle inflation. "interest rates globally are going up, and when rates are going up, generally people tend to look to where their money will be safest, and at the moment it's certainly…There are two countries in the world, Australia and Japan. Suppose that the central bank of Australia and the central bank of Japan raise the real interest rate by 1 percent. In this case, the nominal exchange rate (Yen/Dollar) increases. .True/False. Remember to include your explanation.Suppose that a U.S. firm converts dollars into pounds in order to invest in a British enterprise in the U.K. A year later, the return on the investment is 12 percent in terms of pounds. If, during that period, the dollar appreciated against the pound, then the return on the investment in dollar terms would be A.) dependent on the inflation rate, not the exchange rate. B.) also 12 percent. C.) less than 12 percent. D.) greater than 12 percent.
- If the yen appreciates in value, then: Question 3 options: It is more expensive for Americans to buy Japanese products but cheaper for Japanese to buy American goods It is cheaper for Americans to buy Japanese goods and cheaper for Japanese to buy American goods It is more expensive for Americans to buy Japanese products and more expensive for Japanese to buy American products It is cheaper for Americans to buy Japanese goods but more expensive for Japanese to buy American goods.This summer has been very hot. In fact, many crops that need water to thrive have been suffering from dry conditions. Does poor weather, which reduces crop production, make the US dollar weaker or stronger?The price for a device to do a digital-based design in the United States is USD 185. For the same device in Indonesia, the price is Rp. 2,500,000. If the Rupiah exchange rate per USD is Rp. 13,944, then calculate what the real exchange rate is? Give conclusion whether the price of this device is more expensive / cheaper in Indonesia!
