What is the expected inflation rate in the united states

Assignment Help International Economics
Reference no: EM13205271

Suppose that the exchange rate adjusts so that interest-rate parity holds. Suppose also that the interest rate on a one-year German bond is 7% and the interest rate on a one-year U.S. bond is 4%.

A- Suppose that you expect the exchange rate in one year to be 1.2 dollars per euro. What is the exchange rate today?

B- Suppose that relative purchasing-power parity holds and that the inflation rate in Germany is expected to be 2% over the next year. What is the expected inflation rate in the United States?

Reference no: EM13205271

Questions Cloud

Describe the characteristics of monopolistic competition : the implications of the barriers to entry/exit, the efficiency of this market, profit maximization, elasticity, an explanation of why advertising is more important in this market structure compared to the other types, and any other important chara..
Pattern of precipitation in many grassland biomes : Explain why the pattern of precipitation in many grassland biomes is often the limiting factor that prevents those regions from developing into forest biomes
Compute the net future worth of each project : Consider the following sets of investment projects, each of which has a three-year investment life: Period Project Cash Flow n A B C D 0 -5,000 -2,000 4,500 -3,500 1 5,800 -4,400 -6,000 1,000 2 12,400 7,000 2,000 5,0003 8,200 3,000 4,000 6,000
Example for omnipotent view and the symbolic view : Describe and example for omnipotent view and the symbolic view in management. Hence, provide 3 limitation of each view.
What is the expected inflation rate in the united states : Suppose that the exchange rate adjusts so that interest-rate parity holds. Suppose also that the interest rate on a one-year German bond is 7% and the interest rate on a one-year U.S. bond is 4%. Suppose that you expect the exchange rate in one yea..
Neuroscience-cognitive-social-cultural : An integrated understanding of the explanations provided by the neuroscience, cognitive, social-cultural, and other perspectives in psychology is most clearly provided by
Did the dollar depreciate or appreciate against the pound : Based on the data in table 14.1, did the dollar depreciate or appreciate against the pound, the Canadian dollar, the france, the yen, and the mark between 1970 and 1980 Between 1980 and 1990 Between 1990 and 2000? Between 2000 and 2011
Professional full time legislatures and amateur : Discuss the meaning of "professional" full time legislatures and "amateur" or "citizen" part time legislatures.
What interest rate is used in project-balance calculation : Consider the following information for a typical investment project with a service life of five years: n A B 0 -1,000  -1,000 1 200 -900 2 490 -500 3 550 0 4 -100 -100 5 200 90 What interest rate is used in the project-balance calculation

Reviews

Write a Review

International Economics Questions & Answers

  Explain effect on the us macro-economy of expected oil price

Since Fall of 2011, the price of oil has shown a sharp increase again as continuation steady rise in oil price attributed to the Arab Spring (the political uprising in the Middle Eastern and North African countries) started in the beginning of 201..

  Role of government in handling the crisis

What role did Swiss government and politics play in 2001 liquidity crisis and grounding of Swiss air and did the government and politicians act unethically together with the banks.

  Describe the cost structures of these funds

Identify the process by which the company identifies and raises funds for capital investments. Describe the cost structures of these funds from both internal and external sources.

  Derive a long-run model of exchange rate determination

Derive a long-run model of exchange rate determination, if exchange rates are determined by Absolute PPP, and goods prices exibly adjust to bring about equilibrium in domestic money and nancial markets.

  What percent of gdp does the us spend on health care

What percent of GDP does the US spend on Health care The UK Canada Do you think the United States spends too much on medical care Explain your reasoning using the PPF model List and explain the 3 reasons for this increase.

  What is the current gdp growth rate for the us

What is the current GDP growth rate for the U.S. Examine the trend over the past few years. What trends interest you What stage of the Business Cycle would the U.S. economy be in currently given the trends.

  Calculates payoffs from buying call

Ms. Smith longs 1 XYZ Feb. 40 Call @ 3 and hold it it to expiration. Suppose no transaction costs, Examine this investment in terms of possible profit or loss. Make a payoff diagram.

  Multiple choice questions on purchasing power parity

Smith identify that if the forward rate is lower than what interest rate parity indicates, the appropriate strategy would be to lend:

  Determine major competitors in the wine market

Is there a certain protocol that United State companies must follow when advertising in Singapore? I understand that advertisements cannot contain any hype.

  Discuss the pros and cons of the merger

A recent merger of note is that of Hewlett Packard and Compaq Computers. When the merger was announced, it was widely criticized as not making economic sense.

  Determine exchange rate between euro and british pound

Assume the United State dollar price of a British pound is $1.50; dollar price of a euro is $1; a hotel room in London, England, costs 120 British pounds;

  Technological advances in telecommunications

Determine some of the technological advances in telecommunications and transportation that have impacted global business in the last decade?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd