Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. exchange rate movement suppose a basket of goods

Exchange rate movement Suppose a basket of goods in Paris cost 133 euros and the same basket...

50.1K

Verified Solution

Question

Finance

Exchange rate movement


Suppose a basket of goods in Paris cost 133 euros and the samebasket purchased in

New York cost $153.

A. At what exchange rate between euros and dollars isthe cost of the basket of goods the same in each City?

B. Now suppose that over the next year inflation inFrance is expected to be 2% while in the US the forecast isfor 6% inflation. What exchange rate do you expect a year fromtoday?  

Answer & Explanation Solved by verified expert
4.4 Ratings (825 Votes)
A Price of basket of good in Paris 133 Euros Price of basket of goods in New York 153 We know that according to absolute purchasing power parity price of basket goods should be same in two different countries    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Suppose Intel stock has a beta of 1.52?, whereas Boeing stock has a beta of 0.88....

Finance
Q

Which statement is FALSE of the genetic code? a) it contains a list of codons and...

Biology
Q

3 A light is travelling from air into a medium Velocity of light in a...

Physics
Q

Which of the following is an equation of the line tangent to the graph of...

Basic Math
Q

alculator to find the value of

Calculus
Q

please help asap Ellen was a seamstress who had been unemployed for some years. She...

Accounting
Q

On July 1. 2025, Novak Co, pays $10,200 to Splish Insurance C0, for a 2-year...

Accounting
Q

On January 1 of the current year, Rhondell Corporation has accumulated E \& P of...

Accounting
Q

Please explain your answer. Looking to understand. Thank you! McMullen and Mulligan, CPAs, were...

Accounting
Q

Lamar plans to buy a used truck that costs $20,000. The dealer requires a 20%...

Accounting
Q

1. Prepare the joumal entry to record Tamas Company's Issuance of 6,300 shares of $100...

Accounting
Q

MM Model with Zero Taxes An unlevered firm has a value of $650 million. An...

Finance