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Author Question: Fixed and Floating Exchange RatesExchange rate ($/)Quantity of euros () demandedQuantity of euros () ... (Read 52 times)

gboileau

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Question 1

Purchasing Power Parity

If the average price of a Starbucks Venti Caffe Mocha is $4.50 in the United States and is 120 baht in Thailand, then the implied exchange rate between the Thai baht and the U.S. dollar is ________ baht per dollar.
◦ 4.50
◦ 26.67
◦ 120
◦ 0.04

Question 2

Fixed and Floating Exchange Rates


Exchange rate ($/€)Quantity of            euros (€) demandedQuantity of           euros (€) supplied
1.40​300​440​
1.15​370​370​
0.90​440​300​
Quantities represent millions of euros traded per day.
Refer to the data in the table. The equilibrium exchange rate is $1.15/euro. Suppose the European Central Bank pegs its currency at $1.40/euro. At the pegged exchange rate, there is a  ________.
◦ shortage of euros equal to 300 million
◦ shortage of euros equal to 70 million
◦ surplus of euros equal to 440 million
◦ surplus of euros equal to 140 million


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Marked as best answer by gboileau on Nov 23, 2022

Sha

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gboileau

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Reply 2 on: Nov 23, 2022
Excellent


mohan

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Reply 3 on: Yesterday
:D TYSM

 

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