Answered: True / False Question , explain breifly…

True / False Question , explain breifly ( 3 sentences would be enough ) 1. A trade deficit must be offset by foreign savings.

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 27CTQ: Suppose a country has an overall balance of trade so that exports of goods and services equal...

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True / False Question , explain breifly ( 3 sentences would be enough )

1. A trade deficit must be offset by foreign savings.

2. Imports into Japan are positively correlated with the value of the yen.

3. The purchasing power parity (PPP) hypothesis is that the real exchange rate will
adjust so that the purchasing power of a currency will be the same in every country.

Definition Definition Value of one unit of currency in terms of goods and services. Purchasing power refers to the ability of money to purchase goods and services at a particular point of time. As price levels in the economy increase, the purchasing power of one unit of currency decreases and vice versa.

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