{"id":24113,"date":"2023-07-14T17:23:42","date_gmt":"2023-07-14T17:23:42","guid":{"rendered":"https:\/\/www.goodacademic.com\/blog\/questions\/please-read-chapter-11-exchange-rates-i-the-monetary-approach-in-the-long-run-in-your-textbook-p-376-381-388-396-402-406-412-please-answer-the-following-questions-each-question-is-wort\/"},"modified":"2023-07-14T17:23:42","modified_gmt":"2023-07-14T17:23:42","slug":"please-read-chapter-11-exchange-rates-i-the-monetary-approach-in-the-long-run-in-your-textbook-p-376-381-388-396-402-406-412-please-answer-the-following-questions-each-question-is-wort","status":"publish","type":"questions","link":"https:\/\/www.goodacademic.com\/blog\/questions\/please-read-chapter-11-exchange-rates-i-the-monetary-approach-in-the-long-run-in-your-textbook-p-376-381-388-396-402-406-412-please-answer-the-following-questions-each-question-is-wort\/","title":{"rendered":"Please read Chapter 11 Exchange Rates I: The Monetary Approach in the Long Run in your textbook (p. 376 – 381; 388 – 396; 402 – 406; 412). Please answer the following questions. Each question is worth 5 points."},"content":{"rendered":"

Please read Chapter 11 Exchange Rates I: The Monetary Approach in the Long Run in your textbook (p. 376 – 381; 388 – 396; 402 – 406; 412).<\/span><\/p>\n

Please answer the following questions. Each question is worth 5 points.<\/span><\/p>\n


<\/p>\n

1. What are the assumptions behind the law of one price?<\/span><\/p>\n

2. What is the meaning of purchasing power parity? <\/span><\/p>\n

3. A basket of goods costs \u00a32,000 in the UK and the same basket costs \u00a5300,000 in Japan. If E<\/span>\u00a5\/\u00a3<\/sub> <\/span>= 160, what is the real exchange rate of the yen against the pound? Does the PPP hold? Explain.<\/span><\/p>\n

4. Which exchange rate, nominal or real, takes into account price levels in two countries and why?<\/span><\/p>\n

5. What is the difference between absolute PPP and relative PPP?<\/span><\/p>\n

6. What is the relationship between money growth, GDP growth, and inflation based on the quantity theory of money (the simple model of monetary approach)?<\/span><\/p>\n

7. If a country increases its money supply growth rate from 2% to 4% per year, all else constant, what will be the impact on its inflation rate and exchange rate according to the monetary approach (the simple model)?<\/span><\/p>\n

The following questions can be submitted next week.  We will continue with Chapter 11 in week 4.  So, for this writing, the total score is 35.  <\/span><\/p>\n

<\/span>8. What is the difference between the quantity theory of money and the general theory of money?<\/span><\/p>\n

9. What is real interest parity?<\/span><\/p>\n

10. How does a fixed exchange rate act as a nominal anchor to potentially help control a country’s rate of inflation?<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Please read Chapter 11 Exchange Rates I: The Monetary Approach in the Long Run in your textbook (p. 376 – 381; 388 – 396; 402 – 406; 412). Please answer the following questions. Each question is worth 5 points. 1. What are the assumptions behind the law of one price? 2. What is the meaning of purchasing […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","meta":[],"disciplines":[710],"paper_types":[],"tagged":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/questions\/24113"}],"collection":[{"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/questions"}],"about":[{"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/types\/questions"}],"author":[{"embeddable":true,"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/comments?post=24113"}],"version-history":[{"count":0,"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/questions\/24113\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/media?parent=24113"}],"wp:term":[{"taxonomy":"disciplines","embeddable":true,"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/disciplines?post=24113"},{"taxonomy":"paper_types","embeddable":true,"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/paper_types?post=24113"},{"taxonomy":"tagged","embeddable":true,"href":"https:\/\/www.goodacademic.com\/blog\/wp-json\/wp\/v2\/tagged?post=24113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}