« previous next »

Author Question: Central banks often intervene in currency markets. This activity is called A) managed floating. ... (Read 219 times)

wrbasek0

  • Hero Member
  • *****
  • Posts: 560
on: Jun 30, 2018
Central banks often intervene in currency markets. This activity is called
 
  A) managed floating.
  B) fixing exchange rates.
  C) currency warfare.
  D) super-pegging.
  E) flexible floating.

Question 2

Discuss the relationship between PPP and the Law of One Price.
 
  What will be an ideal response?


Jbrasil

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jun 30, 2018
Answer to Question 1

A

Answer to Question 2

The law of one price applies to individual commodities while PPP applies to the general price level.
Proponents of PPP argue that its validity in the long run doesn't require the law of one price to hold exactly. When goods and services temporarily become more expensive in one country than in others, the demands for its currency and its products falls, pushing the exchange rate and domestic prices back in line with PPP and vice versa.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Glaucoma is a leading cause of blindness. As of yet, there is no cure. Everyone is at risk, and there may be no warning signs. It is six to eight times more common in African Americans than in whites. The best and most effective way to detect glaucoma is to receive a dilated eye examination.

Did you know?

In the United States, an estimated 50 million unnecessary antibiotics are prescribed for viral respiratory infections.

Did you know?

Medication errors are three times higher among children and infants than with adults.

Did you know?

The first oncogene was discovered in 1970 and was termed SRC (pronounced "SARK").

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Joseph Banks Joseph Banks
Outputs of the Central Nucleus of the Amygdala Outputs of the Central Nucleus of the Amygdala
Anticholinergic Drugs and Drugs with Anticholinergic Activity Used for Parkinsonism Anticholinergic Drugs and Drugs with Anticholinergic Activity Used for Parkinsonism
Horizontal, sagittal, and coronal functional MRIs show areas of increased activity in the primary ... Horizontal, sagittal, and coronal functional MRIs show areas of increased activity in the primary ...
Steps in the regulation of p53 levels and activity Steps in the regulation of p53 levels and activity
A lesion called a plaque in the brain of an individual with Alzheimer disease. A ring of degeneratin A lesion called a plaque in the brain of an individual with Alzheimer disease. A ring of degeneratin
Video: Protein catabolism (Krebs cycle) and Protein anabolism (protein synthesis)

For a complete list of videos, visit our video library