When might it be bad idea to use the ppp theory in this way

Assignment Help Econometrics
Reference no: EM131162029

Large-scale wars typically bring a suspension of international trading and financial activity. Exchange rates loss much of their relevance under these conditions, but once the war is over governments wishing to fix exchange rates face problem of deciding what the new rates should be. The PPP theory has often been applied to this problem of postwar exchange rates realignment. Imagine that you are British Chancellor of the Exchequer and World War I has just ended. Explain how you would figure out the dollar/pound exchange rate implied by PPP. When might it be a bad idea to use the PPP theory in this way?

Reference no: EM131162029

Questions Cloud

Conservative force along a closed path : What can be said about the work done by a conservative force along a closed path?
What is the maximum this regulation could cost : what is the maximum this regulation could cost and still have the benefits be at least as large as the cost
Gravitational force due to earth : Suppose the only force acting on an asteroid is the gravitational force due to Earth. As the asteroid approaches Earth, the angular momentum of the asteroid with respect to the center of Earth will
Prepare a plan for handling racist and stereotypic : Examine one or two factors that may have slowed the development of a multicultural and / or global curriculum in schools. Next, propose the best approach to overcoming the factors that you have identified. Provide examples to support your rational..
When might it be bad idea to use the ppp theory in this way : Imagine that you are British Chancellor of the Exchequer and World War I has just ended. Explain how you would figure out the dollar/pound exchange rate implied by PPP. When might it be a bad idea to use the PPP theory in this way?
Ways can resistance to persuasion : In what other ways can resistance to persuasion not be beneficial to us?
What is fred marginal rate of substitution : Fred loves tomatoes. He makes soups, sauces, and stews with them; stuffs them; roasts them; and grills them. Fred has discovered a farmer’s market where the price of a bushel of tomatoes depends on how many bushels are purchased. What is Fred’s margi..
Energy needed for phase changes : How much heat transfer in kJ is necessary to raise the temperature of a 0.386 kg piece of ice from -17.4ºC to 128.2ºC , including the energy needed for phase changes?  (cice= 2090 J/kgºC, cwater = 4186 J/kgºC, csteam= 1520 J/kg, Lvap= 2256 kJ/kg, a..
Discussion posting should include three or more resources : Discussion Post: Engineering And Manufacturing Processes. Discussion posting should include three or more resources, which must be referenced usingAPA style. 200 words.

Reviews

Write a Review

Econometrics Questions & Answers

  Construct the balance of payments for each country

Domestic investors sold $50 of their holdings of foreign government bonds.

  Why did one measure increase while other measure decrease

Real GDP was $4,179 billion in year 1 and $4,848 billion in year 2. IN contrast, real GDP per capita in Year 1 was $19,261, but in year two it was only $19,162. Why did one measure increase while the other measure decreased

  What impact on the value of total consumption in the economy

The marginal propensity to consume is the amount that will be consumed out of each additional dollar earned. Suppose that the MPC has a value of 0.95. If this is true, then a $10 million increase in disposable income.

  What is price-wage rigidity

Do you agree with Keynes assessment that wage-price rigidity requires government's involvement in the markets? Why? Why not?Please note that a minimum of 250 words

  Solve for the equilibrium price ''p''

Solve for the equilibrium price 'P'

  How to solve using backward induction

If they both choose the Casual line, they will each make profits of $1000 per week. If Bells chooses Formal while Follies chooses Casual, then Bells will make $500 and Follies will make $1500 per week. If Bells chooses Casual while Follies choos..

  What would be the average retail price of the soap in china

Given the various modes of international market entry, which mode would be most appropriate for this company? Elaborate.

  Identify the slope and intercept of the budget line

Building on (b), suppose that the worker can earn overtime for each hour above 40 hours worked per week. Her base pay remains at $10/hour, but she earns one and one-half time for each hour beyond 40 hours.

  How many pairs should produce to maximize profit

Suppose you are the manager of Sunglass Hut operating in a competitive market. Your cost of production is given by TC = 100 + Q*Q, where Q is the level of output and TC is the total cost. The marginal cost of production is 2Q.

  What is the equilibrium price in this market

what is the equilibrium price in this market?

  What price should the company charge for a pair of shoes

Suppose that the marginal cost faced by a shoe company is $10 for a pair of shoes. If the demand elasticity for the company's shoes is also constant, and is equal to 5, what price should the company charge for a pair of shoes

  Determine net income for the period of common stock

Determine net income for the period if beginning stockholders' equity is $19,000, dividends declared amount to $7,000, ending stockholders' equity is $37,000 and the corporation issued $1,000 of common stock.

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