Calculate the us interest rate differential

Assignment Help International Economics

Reference no: EM1367348

The United Kingdom pound is trading at 1.82 U.S. dollars per United Kingdom pound. There is purchasing power parity at this exchange rate. The interest rate in the U.S. is 2.5 percent a year and the interest rate in the U.K. is 3 percent a year.

a. Calculate the U.S. interest rate differential.
b. What is the U.K. pound expected to be worth in terms of U.S. dollars one year from now?
c. Which country more likely has the lower inflation rate? How can you tell?

Reference no: EM1367348

Questions Cloud

Information about inelastic demand : Farmers have a relatively inelastic demand for their crops. Suppose there is a bumper crop year (an unusually large harvest).

Assume all surfaces to be frictionless : What is this value? In this state, the interference pattern still appears showing that each individual electron can interfere with itself.

Nursing conceptual or theoretical models to theory-driven : This solution is for a graduate nursing theory class. Please explain the relationship of nursing conceptual or theoretical models to theory-driven, evidence-based practice.

What is the total combined mass of carbon dioxide : A proton is initially at rest at a point where the potential is 507V. Sometime later the proton is at a point where the potential is 187V. If no force other than the electrostatic force acts on the proton, what is its final kinetic energy.

Calculate the us interest rate differential : The United Kingdom pound is trading at 1.82 U.S. dollars per United Kingdom pound. There is purchasing power parity at this exchange rate.

Substitution-law of demand : Apply the substitution and income effects to the purchase of meat given the lower price. How is this related to the law of demand? Hint: use chicken as a substitute good in your discussion.

What is x scalar component : A 3 kg block is observed to accelerate at a rate twice that of the 6 kg block. Is the net force acting on the 3 kg block therefore twice as large as that performing on the 6 kg block? Explain.

Information about equilibrium price and output : The switch to the use of HFCS from sugar in soft drinks was prompted in large part by its relatively lower price. Assuming a competitive market, what effect would this change have on the equilibrium price and output for soft drinks?

Why scr needs a systems review committee : Jesse wants my opinion on whether or not SCR needs a systems review committee. Need to prepare a recommendation and reasons.

User Account

All Pages