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a) Write down the expression for a country's real exchange rate in terms of the nominal exchange rate and aggregate price levels, defining your notation carefully. What does a country's real exchange rate measure?
b) What does purchasing power parity theory state that the value of a country's real exchange rate should be? Under what conditions would you expect purchasing power parity to be a valid description of a country's real exchange rate?
c) Now derive an equivalent expression for a country's real exchange rate, in terms of the real exchange rate of traded goods and the relative price of traded to all goods (or traded to non-traded goods). Define your notation carefully. What does each of these two components of the real exchange rate reflect, in words? Empirically, do we know which is more important for real exchange rates?
d) Suppose there is an increase in domestic demand for non-traded goods relative to traded goods. How would you expect this to affect the country's real exchange rate and why?
e) Suppose the home country imposes a permanent tariff on imported goods from abroad. How do you think this would affect its real exchange rate in the long-run?
Which of the following goods or services would be most likely to be subject to (1) external economies of scale and (2) dynamic increasing returns? Describe your answers.
For decr returns to scale, if a firm hires double the amount of managers and also doubles all other input, the managers may not be able to manage their tasks at hand because of how difficult the company has become to handle. Therefore output will ..
Price Discrimination: Assume that United Airlines knows that it faces the following demand equations and corresponding marginal revenue equations for its (one-way) SFO to Las Vegas route
A company in a purely competitive industry is currently producing 1000 units a day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300.
What would happens to Hi-Tech's profits and the price of books in the short run when Hi-Tech's patents prevents other firms from using the new technology.
1. What roles do vision, mission, and strategy play in the development of a Balanced Scorecard? 2.Under what circumstances should an organization's or an individual's Balanced Scorecard be revised?
To decrease the federal deficit, government would have to cut back on government buy, transfer payments, or increase taxes. How does the federal deficit affect GDP and multiplier?
Explain the motivations of foreign investors and objectives of host countries or the changing parttens of global foreign direct investment.
Compare and contrast the behaviour of the indicators for the United States with those for the Australian economy.
Compute the cross-price elasticity of demand between goods X and Y at the given prices.
Joe Donaldson deposited $80,000 in his new business. Prepare all entries related to above transactions.
Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental econom- ic question are they addressing by making this range of products?
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