Does the existence of non-tradable goods allow for deviation, International Economics

Assignment Help:

Does the existence of non-tradable goods allow for deviations from Purchasing Power Parity?

Answer:  Yes the continuation of non-tradable goods permits deviations from Purchasing Power Parity (PPP).  This is for the reason that the price of a non-tradable good is determined entirely by its domestic supply and demand curves and in turn fluctuations in demand and supply for these goods will affect the price level. Illustrations include haircuts, housing, services, and so on.

 

 


Related Discussions:- Does the existence of non-tradable goods allow for deviation

International trade for ideological reasons, Q. Albania refused to engage ...

Q. Albania refused to engage in international trade for ideological reasons. To maximize its economic welfare it could choose to produce at which point in the diagram above? Sup

Absolute advantage by adam smith, which book by adam smith explains the abs...

which book by adam smith explains the absolute advantage ?

Economic growth, roles of international trade in economic growth of the cou...

roles of international trade in economic growth of the country

Excessive current account surpluses, Q. Why do governments prefer to avoid ...

Q. Why do governments prefer to avoid excessive current account surpluses? Or, why are growing domestic claims to foreign wealth ever a problem? Answer: On behalf of a given l

Economic stability loss due to fixed exchange rates, Q. Explain why even o...

Q. Explain why even owners of capital that cannot be moved can avoid more of the economic stability loss due to fixed exchange rates when Norway's economy is open to capital flows

#titleADAM SMITH''S TRADE THEORY OF ABSOLUTE ADVANTAGE, Critical evaluation...

Critical evaluation of Adam Smith''s Theory. Outline of its purest form. What is its critism?

Explain why relative ppp is useful, Q. Explain why Relative PPP is useful w...

Q. Explain why Relative PPP is useful when comparing countries that base their price levels on different product baskets. Answer: For instance If the U.S price level increase

Exchange rate determination, Q. Describe the chain of events leading to exc...

Q. Describe the chain of events leading to exchange rate determination for the following cases: 1. An increase in the U.S money supply 2. An increase in the growth rate of the

Specific factors of international trade, Q. The Specific Factors model mak...

Q. The Specific Factors model makes a distinction between general-purpose factors that can move between sectors and factors that are specific to particular uses. How do difference

Could relative wages in the two countries become equal, Q. If trade were t...

Q. If trade were to open up between R and P, where could the world terms of trade locate in the figure above (somewhere on the PC/PF axis)? Could relative wages (w/r) in the two c

Write Your Message!

Captcha
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