i don’t think this one is that bad but i blew it. if you get it right, i may have to pull a tonya harding attack on your calculator on test day. At the beginning of the period, the exchange rate between Country A and Country B is 3 (quoted as A/B). The ratio of the prices of the consumption basket in Country A to Country B is 2. During the year, Country A has inflation of 10 percent and Country B has inflation of 0 percent. At the end of the year, the exchange rate is 3.5. What is the end-of-period real exchange rate? A) 1.00. B) 1.50. C) 1.59. D) 0.45.
C?
PL(A)/PL(B) = 2/1 factor in inflation of 10% for A and 0% for B PL(A)/PL(B) = 2.2/1 3.5* 1/2.2 = 1.59090= C?
I got C. 2*1.1 = 2.2 3.5/2.2 = 1.59.
don’t know why i had problems with this. all of you better watch out on test day. good job guys.
C
I had no idea how to do this problem. Which LOS does this refer to?
cfasf1 Wrote: ------------------------------------------------------- > don’t know why i had problems with this. all of > you better watch out on test day. good job guys. I love my calculator. I you come for it, you better go all out…I won’t go down easy.
ruhi22 Wrote: ------------------------------------------------------- > I had no idea how to do this problem. Which LOS > does this refer to? This is stuff from the international portion of PM. I don’t know the exact LOS (don’t have my books with me).
3/2 = 1.5 3.5/2.2 = 1.59 I’ll go with C)
mwvt9 Wrote: ------------------------------------------------------- > ruhi22 Wrote: > -------------------------------------------------- > ----- > > I had no idea how to do this problem. Which LOS > > does this refer to? > > This is stuff from the international portion of > PM. I don’t know the exact LOS (don’t have my > books with me). yup. and i glossed over it because i thought it was covered in economics. similar but tested differently. i will have to review that section.
mwvt9 Wrote: ------------------------------------------------------- > ruhi22 Wrote: > -------------------------------------------------- > ----- > > I had no idea how to do this problem. Which LOS > > does this refer to? > > This is stuff from the international portion of > PM. I don’t know the exact LOS (don’t have my > books with me). Okay…now I feel better. I haven’t looked at PM since quite some time. I thought that it’s from Economics.
mwvt9 Wrote: ------------------------------------------------------- > I love my calculator. I you come for it, you > better go all out…I won’t go down easy. Not like it matters anyway. You realize that the BA II Plus, BA II Professional, and the HP 12C all have a dormant virus in them right? It happens at random but when the virus is activated, all of your answers will…uh, nevermind…I am sure they will work perfectly come June 7th. muahahhaha
you really have to know the exact section that this question is from and how they define real exchange rate… the real exchange rate starts at 3 divided by 2. then at end it’s 3.5 divided by (2 * 1.1) = 1.59… simple question if you knew the section and did the concept checkers in schweser. but first time i saw this question after seeing the readings, i had no clue how they defined it.
another for the review list…