PS1 - ECON 321, International Monetary Theory, Spring 2006...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 321, International Monetary Theory, Spring 2006 Arslan Razmi Problem Set 1 (due on Tuesday Feb. 28 2006) 1. You were given a handout in class that compared the “Big Mac Index” across countries. Recently The Economist has developed a similar index called the “Tall Latte Index.” Have a look at this index. If the Purchasing Power Parity (PPP) theory were true, what would you expect to see (be sure to distinguish between various versions of the PPP). Do you see what you expected to see? Discuss some of the factors that could cause deviation from PPP. 2. Consider the following (hypothetical) data: Thailand’s International Transactions (in millions of US dollars) Exports of autos 200 Exports of computer components 300 Purchase of insurance from Lloyds of London 50 Sale of Thai airlines tickets to foreigners 50 Net new purchases of US treasuries 250 Interest flows from US Treasury bills 100 Foreign Direct Investment by Japanese Corporations in Thailand 50 Repatriation of profits by Japanese corporations
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/07/2008 for the course ECONOMICS 321 taught by Professor Razmi during the Spring '08 term at UMass (Amherst).

Page1 / 2

PS1 - ECON 321, International Monetary Theory, Spring 2006...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online