EBK MICROECONOMICS
21st Edition
ISBN: 8220103960151
Author: McConnell
Publisher: YUZU
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Chapter 27, Problem 3RQ
To determine
The exchange rate changes.
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Say that in Miami, in Coral Gables, a big mac cost $4.25 and a large fries cost $2.50. In Japan, the total cost of a big mac and
large fries is 81 Yen. The according to purchasing power parity, the exchange rate that equalizes purchasing power of this
basket of goods is
8.5
О 12
O 6.5
O 10
Purchasing power parity theory would suggest that if the Canadian price of a basket of goods is C$1,800, but the same basket in the United States is U.S.$1,300,
and the actual exchange rate is C$1.30 = U.S.S1.00, then the value of the Canadian dollar should
O A. depreciate by approximately 8.9 percent.
O B. depreciate by approximately 6.2 percent.
OC. appreciate by approximately 8.9 percent.
O D. appreciate by approximately 6.2 percent.
O E. remain unchanged.
In Ireland, a pint of beer costs 2.2 Irish pounds. In Australia, a point of beer costs 4 Australian dollars.
If the nominal exchange rate is 2 Australian dollars per Irish pound, what is the real exchange rate
from the Irish perspective?
O 0.91
O 1.1
3.64
O 4.4
Chapter 27 Solutions
EBK MICROECONOMICS
Ch. 27.1 - Prob. 1QQCh. 27.1 - Prob. 2QQCh. 27.1 - Prob. 3QQCh. 27.1 - Prob. 4QQCh. 27.A - Prob. 1ADQCh. 27.A - Prob. 1ARQCh. 27.A - Prob. 1APCh. 27 - Prob. 1DQCh. 27 - Prob. 2DQCh. 27 - Prob. 3DQ
Ch. 27 - Prob. 4DQCh. 27 - Prob. 5DQCh. 27 - Prob. 6DQCh. 27 - Prob. 7DQCh. 27 - Prob. 8DQCh. 27 - Prob. 9DQCh. 27 - Prob. 10DQCh. 27 - Prob. 11DQCh. 27 - Prob. 1RQCh. 27 - Prob. 2RQCh. 27 - Prob. 3RQCh. 27 - Prob. 4RQCh. 27 - Prob. 5RQCh. 27 - Prob. 6RQCh. 27 - Prob. 7RQCh. 27 - Prob. 8RQCh. 27 - Prob. 9RQCh. 27 - Prob. 10RQCh. 27 - Prob. 1PCh. 27 - Prob. 2PCh. 27 - Prob. 3PCh. 27 - Prob. 4PCh. 27 - Prob. 5P
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