If the expected inflation rates for the next year are 0.5% in UK and 2.5% in the U. S. and the PPP based exchange rate is $1.20 per pound, what is the expected PPP based exchange rate for the next year? Compute answer tp two decimal places and report without any currency symbols.

If the consumer price index for the United States rises from 150 at the beginning of a year to 155 at the end of the year, how much inflation was there in the United States during that year? Report the answer as a percentage rounded to two decimal places without the % symbol. For example, an answer of 7.232% will be reported as 7.32

If the annual inflation rates are 0.5% in Japan and 1.5% in US and the spot exchange rate is 110 yen per dollar will the exchange rate expected to increase or decrease over a year? Assume relative PPP holds and note that the exchange rate is stated in indirect terms..

- increase ( yen depreciates against the dollar)

- decrease ( yen appreciates against the dollar)

The inflation rate in Germany is 4% per annum and the inflation rate in the US is 6% per annum. Over the year the spot exchange rate went from $1.30 per euro to $1.35 per euro. Is this information consistent with relative PPP?

- Yes

- No

A Big Mac costs $4.50 in the U. S. and £ 3.00 in UK. If the exchange rate is $1.20 per pound will a British tourist find Big Macs cheaper or more expensive in US compared to buying them back home in UK?

- Less expensive

- more expensive

Suppose that a consumption bundle costs $300 per unit in New York and SGD 450 in Singapore. Suppose further that the spot exchange rate in the market on that day is USD 0.80 per SGD.

Based on the PPP exchange rate is the SGD considered over or undervalued relative to USD?

- Overvalued

- undervalued

A Big Mac costs $4.50 in the U. S. and 3.60 euros in Germany. What is the Big Mac PPP based exchange rate expressed as dollars per euro? Round the answer to two decimal places and report it without any currency symbols.

Over a year the consumer price index changed from 200 to 204 in the US. For the same period the Canadian inflation rate was 5%. The exchange rate was USD 0.95 per CAD at the beginning of the year. What should be the exchange rate at the end of the year if relative PPP were to hold? Round the answer to two decimal places and report it without any currency symbols

Which one of the following statements is true if relative PPP held for a currency pair?

- the change in the nominal exchange rate will be related to the difference between the interest rates

- The change in the nominal exchange rate will be related to the difference between the inflation rate

When the purchasing power of the dollar in the U. S. is greater than its external purchasing power in U. K. the US dollar said to be:

- Undervalued related to the pound

- Overvalued relative to the pound