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

  Differences in principle of comparative & absolute advantage

Are there any similarities and differences between the principle of comparative advantage and absolute advantage?

  Discussion on federalism

The U.S. at the end of World War II stood as the world preeminent superpower, with new discovered political and economic wealth. To what degree, if any, has U.S. ascendancy on world stage affected notions of federalism?

  Heckscher ohlin and ricardian theory

According to Staffan Linder, there are 3-explanations of international trade patterns one for produces and another for primary goods.

  Calculate the forward discount

Calculate the forward discount or Premium for the Mexican peso whose 90-day forward rate is $.102 and spot rate is $.10. State whether your answer is a discount or premium.

  What industries in the u.s. now have trade barriers

What industries in the U.S. now have trade barriers and what is Foreign Direct Investment (FDI)? Provide an example of how the U.S. is involved in FDI.

  Is such a trade possible in scenario

If the local environmental quality in Tennessee declines as a result of this trade, then indicate a potential Coase agreement that could avoid the environmental decline and would still make the trade profitable to both parties ? Is such a trade po..

  Determine franc appreciated or depreciated against dollar

Assume the value of the French Franc in terms of dollar is  50 on October 12 , and 44 on October 17. Determine the Franc appreciated or depreciated against the dollar?

  Economic perspective and environmental perspective

As an option to standards, one rule proposal is use of allow trading among point sources of water pollution. Provide some major reason why this is advantageous from an economic perspective & from an environmental perspective.

  What are the advantages of flexible exchange rates

Flexible Exchange Rate - What are the advantages of flexible exchange rates respect to fixed exchange rates? Are there disadvantages?

  Define seigniorage

Which are preferable and why, fixed, flexible, or a mixture of the two exchange rates? What nations have officially dollarized their economies. How does United States benefit from it?

  What do you think happened to university revenues

When the British government tripled university fees for foreign students in Great Britain, about one-half of them left to study in other countries." What is the implied price elasticity of demand by foreigners for a British education is (in absolu..

  Forecasting with moving average method

Information covering the most recent thirty days are given in the following table for the rate per gallon of regular gasoline at a local station.

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