Inflation and interest rate effects

Assignment Help Finance Basics

Reference no: EM1345892

The opening of Russia's market has resulted in the highly volatile Russian currency (the ruble). Russia's inflation has basically exceeded 20 percent per month. Russian interest rates commonly exceed 150 percent, but this is sometimes less than annual inflation rate in Russia.

a. Describe why the high Russian inflation has put severe pressure on the value of the Russian ruble.

b. Does the effect of Russian inflation on the decline in the ruble's value support the PPP theory? How might the relationship be distorted by political conditions in Russia?

c. Does it appear that the prices of Russian goods will be equal to the prices of U.S. goods from the perspective of Russian consumers (after considering exchange rates)? Explain.

d. Will the effects of the high Russian inflation and the decline in the ruble offset each other for U.S. importers? That is, how will U.S. importers of Russian goods be affected by the conditions?

Reference no: EM1345892

Questions Cloud

Violating company communication policy : Explain what is the company's argument and how does it interpret the actions compared to the law -What evidence would the company need to have?

How lseek call makes a seek to file : Where lseek call makes a seek to byte 3 of file. What does buffer comprise after the read has completed?

Explain what makes a person more adaptable : Explain what makes a person more adaptable at one form of communication over another and how can an individual reduce his/her apprehension in the various communication settings?

Explain how does culture influence your feelings : Global Communication - Explain how does culture influence your feelings or thoughts about what constitutes socially

Inflation and interest rate effects : The opening of Russia's market has resulted in the highly volatile Russian currency (the ruble). Russia's inflation has basically exceeded 20 percent per month. Russian interest rates commonly exceed 150 percent, but this is sometimes less than an..

Shifting payroll period : Billings Village is planning shifting its payroll period from twice a month to monthly. Total payroll for the year is $80 million. Billings can earn 6 percent on its invested money.

Effective intercultural communication : Effective Intercultural Communication - Explain what are the steps toward effective intercultural communication? Explain each of them.

Assessing economic exposure : Alaska, Inc., plans to create and finance the subsidiary in Mexico which produces computer components at a low cost and export them to other countries. It has no other international business. The subsidiary will produce computers and export them t..

Briefly explain business, audit and security risk : Understanding risks is important for any business. As discussed in our text by Bryant, Hunton, and Bagranoff, risks are categorized in four major parts:

User Account

All Pages