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Author Question: If a nation's interest rates are relatively low compared to those of other countries, then the ... (Read 10 times)

ss2343

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Question 1

A Big Mac costs $3 in the United States and 50 pesos in Mexico. The purchasing power parity theory would predict that the exchange rate in the long run is


◦ $1 = 6 pesos.
◦ $1 = 16.67 pesos.
◦ $1 = 0.06 pesos.
◦ 1 peso = $1.50.

Question 2

If a nation's interest rates are relatively low compared to those of other countries, then the exchange value of its currency will tend to


◦ depreciate under a system of floating exchange rates.
◦ depreciate under a system of fixed exchange rates.
◦ appreciate under a system of fixed exchange rates.
◦ appreciate under a system of floating exchange rates.


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Marked as best answer by ss2343 on Apr 19, 2019

cuttiesgirl16

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ss2343

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Reply 2 on: Apr 19, 2019
Great answer, keep it coming :)


coreycathey

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Reply 3 on: Yesterday
:D TYSM

 

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