678 PART ELEVEN THE MACROECONOMICS OF OPEN ECONOMIES a. Dutch pension funds holding U.S. government bonds b. U.S. manufacturing industries c. Australian tourists planning a trip to the United States d. an American firm trying to purchase property overseas 8. What is happening to the U.S. real exchange rate in each of the following situations? Explain. a. The U.S. nominal exchange rate is unchanged, but prices rise faster in the United States than abroad. b. The U.S. nominal exchange rate is unchanged, but prices rise faster abroad than in the United States. c. The U.S. nominal exchange rate declines, and prices are unchanged in the United States and abroad. d. The U.S. nominal exchange rate declines, and prices rise faster abroad than in the United States. 9. List three goods for which the law of one price is likely to hold, and three goods for which it is not. Justify your choices. 10. A can of soda costs $0.75 in the United States and 12 pesos in Mexico. What would the peso-dollar exchange
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.