PP_Slides_Class_27_Wednesday_April_23

# PP_Slides_Class_27_Wednesday_April_23 - Good Morning Class...

This preview shows pages 1–12. Sign up to view the full content.

Good Morning!! Class 27 Wednesday, April 23

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
1. Where is the final exam? a. 103 Erickson b. 108 Wells c. 120 BCC d. 1281 Anthony
1. What day is the final exam? a. Monday, April 28 b. Tuesday, April 29 c. Wednesday, April 30 d. Thursday, May 1 e. Friday, May 2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
1. What time is the final exam? a. 8:00 – 10:00 am b. 10:00 am – 12 noon c. 8:00 – 10:00 pm d. 3:00 – 5:00 pm
The Hamburger Standard

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Big Mac Index The Economist January 14, 2006 January 9, 2006 data in US Big Mac costs \$3.15 in China Big Mac costs \$1.30
use Figure 6 February 15, 2006 exchange rate 8.05 yuan / \$ What does Big Mac cost in China in yuan? \$1.30 × (8.05 yuan / \$) = 10.47 yuan

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
International Financial Theory says that in the long run the exchange rates should adjust so that the same good costs the same amount in any two countries. What would the exchange rate have to be for the Big Mac to cost the same in both the US and in China?
Domestic price in \$ × yuan / \$ exchange rate = foreign price in yuan \$3.15 × ? = 10.47 yuan (\$3.15 / 10.47 yuan ) × ? = 1 .3 ? = 1 ? = 3.33 yuan / \$

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
at an exchange rate of 3.33 yuan / \$ Big Mac in \$: in US costs \$3.15 in China costs 10.47 yuan / (3.33 yuan / \$) = \$3.15 in yuan: in US costs \$3.15 × (3.33 yuan / \$) = 10.47 yuan in China costs 10.47 yuan
this implies that the exchange rate should fall from 8.05 yuan / \$ to 3.33 yuan / \$ OR

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern