This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Is PPP a theory of exchange rate determination? Explain why or why not? What will be an ideal ... (Read 32 times)

urbanoutfitters

  • Hero Member
  • *****
  • Posts: 530
on: Jun 30, 2018
Is PPP a theory of exchange rate determination? Explain why or why not?
 
  What will be an ideal response?

Question 2

International Economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know
 
  A) their theory is the best available.
  B) their theory is internally consistent.
  C) their theory passes the reasonable person legal criteria.
  D) their theory is good enough to explain the international trade that is actually observed.
  E) their theory accounts for China's unique position in international trade.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

bassamabas

  • Sr. Member
  • ****
  • Posts: 294
Reply #1 on: Jun 30, 2018
Answer to Question 1

PPP is not a theory of exchange rate determination. It describes an equilibrium relationship between two endogenous variablesprices and exchange rates. As such, the PPP relationship should be viewed as a short-cut rather than a substitute for a complete determination of prices and exchange rates. Its main usefulness is in providing a guide to the general trend of exchange rates rather than day-to-day fluctuations.

Answer to Question 2

D


urbanoutfitters

  • Member
  • Posts: 530
Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

adf223

  • Member
  • Posts: 304
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

The B-complex vitamins and vitamin C are not stored in the body and must be replaced each day.

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

Did you know?

There are major differences in the metabolism of morphine and the illegal drug heroin. Morphine mostly produces its CNS effects through m-receptors, and at k- and d-receptors. Heroin has a slight affinity for opiate receptors. Most of its actions are due to metabolism to active metabolites (6-acetylmorphine, morphine, and morphine-6-glucuronide).

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

Women are 50% to 75% more likely than men to experience an adverse drug reaction.

The Triangular Theory of Love The Triangular Theory of Love
How would you rate your overall health?” The percent of adults answering “excellent” or ... How would you rate your overall health?” The percent of adults answering “excellent” or ...
Static Stability & Environmental Lapse Rate Static Stability & Environmental Lapse Rate
Desired Fertility versus Total Fertility Rate in Developing Countries Desired Fertility versus Total Fertility Rate in Developing Countries
A bus starts from restat a station and accelerates at a rate of 2 m/s^2 for 15 seconds. It then runs A bus starts from restat a station and accelerates at a rate of 2 m/s^2 for 15 seconds. It then runs
Calculating Growth Rate of Bacteria Calculating Growth Rate of Bacteria
Video: Atrial natriuretic peptide (vasodilation) & Aldosterone

For a complete list of videos, visit our video library