Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Purchasing Power Parity (PPP):
The exchange rate is determined by the relative purchasing power of currency withineach country. For example, if a product X costs Rs. 100 in India and costs $2 in USA,then the rupee - dollar exchange rate is Rs. 50 per $. This illustrates the theory ofPurchasing Power Parity (PPP) wherein two currencies are at purchasing power paritywhen a unit of domestic currency can buy the same basket of goods at home or abroad.There are two versions of PPP, the Absolute PPP and the Relative PPP. The AbsolutePPP postulates that the equilibrium exchange rate between two currencies is equal tothe ratio of price levels in the two countries. Specifically,
R = P1/P2
Where P1 is the price level in the home country and P2 is the price level in the foreigncountry.The Relative PPP postulates that the change in exchange rate is equal to the differencein changes in the price levels in the two countries. Specifically
R' = p1'- p2'
Thus, the percentage change in exchange rate (R´) will be equal to the percentagechange in domestic prices (P´1) minus the percentage change in foreign prices (P´2).
This would be true as long as there are no changes in transportation costs, obstructionto trade (tariff and non-tariff barriers) and the ratio of traded to non-traded goods.Since trade and commodity arbitrage respond sluggishly (due to the above factors),relative PPP can be approximated in the long run.Thus, in the long run, the real exchange rate will return to its average level. In otherwords, if real exchange rate is above long run average level, PPP implies that theexchange rate will fall.
if australian governmrnt imposed a sales tax on petrol by $0.25, then the price of petrol will rise by 0.25. consumers can not get by without petrol, so they have to pay the whole
Total cost curve (TC) is obtained by adding up vertically total fixed cost and total variable cost curves because the total cost is sum of total fixed cost and total variable cost
Equity: The proportion of a company's total assets which are "owned" outright by the company's owners. A company's equity is equivalent to its value less its debt owed to bankers,
Why does a price index based on constant weights tend to overstate inflation in periods after the base year when the price of one good is rising quickly compared to other goods?
Revenue and Profit Maximization: Whenever a good is produced, the individual firm which has produced incurs costs which are are referred to as private costs and the society in
#question.explain three neccessary condition to achieve pareto efficiency.
True public goods are those goods which can't be provided to one group of consumers, without being provided to any other consumers who desire them. Thus they are "non-excludable."
Which of the following is a free good? Fresh water, forests in the northwestern United States, the advice of economists, or none of the above?
Answer the following questions based on the graph that represents J.R.'s demand for ribs per week at Judy's Rib Shack. a. How high must the price of ribs be for Judy to supply
what is histogram?
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd