Econ_102_Final_Exam_Review__S09

Econ_102_Final_Exam_Review__S09 - Econ 102(01 Review...

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Econ 102(01) -  Review Questions for the Final Exam – S09 1 1. If the nominal exchange rate is 2 euros to the dollar, and if the price of a Big Mac is $2 in  Canada and 6 euros in Germany, then the real exchange rate is:  a) 2/3 German Big Mac per Canadian Big Mac b) 3/2 German Big Mac per Canadian Big Mac c) 2/3 Canadian Big Mac per German Big Mac d) None of the above 2. If the yen/dollar exchange rate rises, the dollar has: 3. Suppose the real exchange rate between Russia and Canada is defined in terms of bottles of  Russian vodka per bottle of Canadian vodka.  Which of the following will increase the real exchange  rate (that is, increase the number of bottles of Russian vodka per bottle of Canadian vodka)? 4. Suppose a cup of coffee is 1.5 euros in Germany and $0.50 in Canada.  If  purchasing-power parity holds, what is the nominal exchange rate between euros and dollars? 5. Suppose the inflation rate over the last 20 years has been 9% in Great Britain, 7% in Japan, and 5%  in Canada. If purchasing-power parity holds, which of the following statements is true?  Over this  period: a)  The value of the dollar should have fallen compared to the value of the pound and the yen b)  The yen should have risen in value compared to the dollar c) The yen should have fallen in value compared to the pound and risen compared to the dollar d) The value of the pound should have risen compared to the value of the yen and the dollar e)  None of the above
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