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  3. 1. suppose the exchange rate between us$ and euro,

1. Suppose the exchange rate between US$ and Euro, US$ and Japanese Yen are:     1 US$...

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Economics

1. Suppose the exchange rate betweenUS$ and Euro, US$ and Japanese Yen are:

    1 US$ = 2 Euro; 1US$ = 100 Yen.

    Suppose theinterest rates published by central banks in the U.S., Euro zone,and Japan are 2%, 3%, and 4%, respectively;

    And, suppose theinflation rates in the U.S., Eurozone, and Japan are 1%, 2%, and1%,

    respectively.Therefore, (calculation formula is optional)

Q1.1: How much Yen can 1 Euro exchangefor?

Answer1.1:

Q1.2: What is the real interest ratefor the US, Euro zone, and Japan, respectively?

Answer1.2:

           US=

           Euro zone=

           Japan=

Q1.3: (True/False) A person with 2Euro can convert the money into Yen and save it in Japanese banksfor one year, and get 103 Yen back.

Answer1.3:

Answer & Explanation Solved by verified expert
4.2 Ratings (840 Votes)
11 1US 2 Euro 1US 100 Yen 100 Yen 2 Euro 1 Euro 100 Yen 2 1 Euro 50 Yen 1 Euro can exchange for 50 Yen 12 Real interest rate Nominal Interest rate Infaltion rate The real interest rate in US Nominal Interest rate in    See Answer
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