Author Question: Suppose the exchange rate between the U.S. dollar and the Jamaican dollar was 1 U.S. = 40 Jamaican ... (Read 107 times)

altibaby · **on:** Jun 29, 2018

Suppose the exchange rate between the U.S. dollar and the Jamaican dollar was 1 U.S. = 40 Jamaican dollars. A beach towel sells for 20 in Miami and 60 Jamaican in Negril.

A) Purchasing power parity does not prevail with these prices.
B) The U.S. dollar would be expected to depreciate.
C) The Jamaican dollar would be expected to appreciate.
D) All of the above are correct.

Question 2

Which of the following tools is NOT a policy tool of the Fed?

A) last resort loans
B) the tax rate on interest income
C) the reserve ratio
D) open market operations