Question
The real exchange rate () in a SOE in the long run would increase if government spending ________________ (increases/decreases), or if net taxes ________________ (increase/decrease),
Thereal exchange rate() in a SOE in the long run wouldincreaseifgovernment spending
________________ (increases/decreases), orifnet taxes ________________ (increase/decrease), orifa tax
incentive_______________ (stimulates/limits) investment, oriffiscal policies from large foreign countries are
_________________(expansionary/contractionary), oriftrade policy is _____________ (adding/removing) a
tariff on foreign goods.
The price of a Big Mac in the U.S. is $4.79, the price of a Big Mac in South Korea is 4,100 Won, and the market
nominal exchange rate is e = 1084.65 Won/$. The implied ePPPis equal to ___________, the actual real exchange rate is
equal to _______________, and the dollar is ___________________ (undervalued/overvalued) relative to the Won.
Show your calculation forePPPand . Give aninterpretationof your numerical answer for.
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Principles Of Economics
Authors: Robert H. Frank, Ben Bernanke Professor, Kate Antonovics, Ori Heffetz
6th Edition
0078021855, 9780078021855
