Solutions to Assignment #2 Questions
Two countries, the United States and England, produce only one good, wheat. Suppose the price of
wheat is $3.25 in the United States and is 1.35 in England.
According to the law of one price, what should the
Solutions to Assignment #1
For each of the following six scenarios, say whether the value of the dollar will appreciate, depreciate, or
remain the same relative to the Japanese yen. Explain each answer. Assume that exchange rates are fr
Ch. 2 (page 97): Problem #2
2. In 1995, one dollar bought 80. In 2000, it bought about 110.
What was the dollar value of the yen in 1995? What was the yens dollar
value in 2000?
Answer. The dollar value of the yen in 1995 was $0.0125 (1/80). By 2000, t