In the presences of purchasing power parity, if one-dollar exchanges for 2 British pounds and if a DVD player costs $400 in the United States then in Britain the DVD player should cost ?

Related Mcqs:

1. IF when cost $4 per bushel in the United States and 2 pounds per bushel in Great Britain then in the presence of purchasing power parity the exchange rate should be ?

   A. $50 per pound
   B. $1.00 per pound
   C. $2.00 per pound
   D. $8.00 per pound

2. Assume that a Big Mac hamburger cost $3 in the United States 2 pesos in Mexico The implied purchasing power parity exchange rate between the peso and the dollar is ?

   A. 0.67 pesos = $1
   B. 0.8 pesos = $1
   C. 1.25 pesos = $1
   D. 1.67 pesos = $1

3. Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

   A. appreciate by 8 percent against the yen
   B. depreciate by 8 percent against the yen
   C. remain at its existing exchange rate
   None of the above

4. Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?

   A. anticipate the dollar to depreciate against the euro
   B. anticipate the dollar to appreciate against the euro
   C. anticipate the dollar’s exchange rate against the euro to remain constant
   D. have no anticipation concerning future movements in the dollar/euro exchange rate

5. If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals ?

   A. 20 pounds
   B. 40 pounds
   C. 60 pounds
   D. 80 pounds

6. Suppose that a Swiss television set that costs 400 francs in Switzerland cost $200 in the United States. The exchange rate between the franc and the dollar is ?

   A. 2 francs per dollar
   B. 1 franc per dollar
   C. $2 per franc
   D. $3 per franc

7. Which statistical factor is used to convert current currency purchasing power into inflation adjusted purchasing power ?

   A. Deflector
   B. Purchasing power parity
   C. Inflator
   D. Deflation

8. The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?

   A. inflation effects exchange rates
   B. international capital flows affect exchange rates
   C. governments sometimes impose trade restrictions such as tariffs and quotas
   D. not all products are internationally tradeable

9. Purchasing power parity exchange rates are used to ?

   A. compare living standards of different countries
   B. pay wages b multinational companies
   C. estimate the costs of economic growth
   D. convert nominal GDP to real GDP

10. The University of Pennsylvania researchers Summers and Heston compute the price level of GDP as the ratio of purchasing power parity (PPP) exchange rate to the actual exchange rate where ?

    A. both exchange rates are measured s the domestic currency price of the US-dollar
    B. both exchange rates are not converted into international dollars
    C. both exchange rate are pegged
    D. both exchange rate are converted into Big Mac PPP formula