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  • Purchasing Power Parity?

    Price of big mac in Hungary = 529 forints

    Actual exchange rate = 204 forints / US$

    Price of big mac in Canada = C$ 3.27

    Actual exchange rate = 1.24 C$ / US$

    Price of big mac in USA = US$ 3.06

    According to purchasing power parity, what is the predicted exchange rate between the Hungarian forint and the Canadian dollar? What is the actual exchange rate?

    2 AnswersEconomics1 decade ago
  • Need help finding predicted exchange rate?

    Price of big mac in Indonesia = 14,600 rupiah

    Actual exchange rate = 9,541 rupiah / US$

    Price of big mac in USA = $3.06

    Predicted exchange rate = ? rupiah / US$

    The formula that i got from the textbook is:

    Real exchange rate = Nominal exchange rate * Domestic price / Foreign Price

    I am kind of confused. Is Nominal Exchange rate = Predicted exchange rate?

    3 AnswersEconomics1 decade ago
  • if v = constant, does this mean that zero-inflation require that the rate of money growth equals to zero?

    V = constant

    MV = PY

    M is the money supply

    V is the velocity of circulation of money

    P is the general price level

    Y is the real value of national output (i.e. real GDP)

    If yes, explain why? If no, explain what the rate of money growth should equal.

    1 AnswerEconomics1 decade ago