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Suppose that a Toyota Camry costs $25,000 in the U.S. and €20,000 in Europe, while the nominal dollar-euro exchange rate is 0.9€/$.
a. Describe how an arbitrageur could profit from this situation (What would they buy? What would they sell?
b. Based on the Law of One Price, what is the equilibrium nominal exchange rate between theU.S. dollar and the euro? What is the equilibrium real exchange rate between the U.S. and Europe?
c. Suppose the price of everything in the U.S. (including a Toyota Camry) increased by 5%. Allelse equal, how would that affect the equilibrium euro price of the U.S. dollar (i.e. - e*(€/$))in the long run (up or down, and by how much)? Explain.
Discuss your power sources (and your co-owner of the property you two are trying to sell power sources) in this negotiation, and analyze how you can strengthen your power position
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Compute the deadweight loss if the U.S. imposes a tariff of 25 cents per bottle of imported wine.
Suppose you compare your income this year and last year and find that your nominal income fell but your real income rose. How could this have happened?
The structuralist believes that the world functions within a system or structure that is tilted in favor of the rich and powerful, and which ultimately determines the winners and losers. The dependence theory of international imperialism is a structu..
Precise Engineering Corporation has a contract with Quik Mart Stores to provide customized software for Quik’s inventory control system. Retail Outlets, Inc., Quik’s competitor, induces Sam, a Precise subcontractor who is writing code for the Quik ..
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