Us dollar and canadian dollar

Assignment Help Macroeconomics

Reference no: EM1311375

You are trying to decide whether to buy some laptop computers for your business in either Canada or in United States. Looking at identical machines on the Dell Canada and the Dell US web sites, you find that they sell for US $2000 (US dollars) in the United States and C$3,000 (Canadian dollars) in Canada

(i) Where would you buy the laptop computer if the exchange rate between the Canadian dollar and the U.S. dollar is U.S. $0.80 per Canadian dollar?

(ii) Where would you re-sell it if you wanted to make a profit? (Ignore any taxes, tariffs, transportation costs, and differences in quality).

(iii) Does purchasing power parity hold?

(iv) If many Canadian and American businesses acted like you, and if the exchange rate was flexible, what would happen to the value of the exchange rate?

(v) What would be the new equilibrium exchange rate that would make purchasing power parity hold for laptops, if the U.S. dollar price and the Canadian dollar price stayed constant?

Reference no: EM1311375

Questions Cloud

Relationship between labor variance and overhead variance : Describe the relationship between the labor efficiency variance and the variable overhead efficiency variance.

Determine a budget variance : Determine a budget variance and a volume variance and determine a budget variance and a volume variance for fixed manufacturing overhead costs for the year

Representation of summation sign : The summation sign is usually represented by:

Determine the spending and efficiency variance : Determine the spending and efficiency variance for variable manufacturing overhead costs for the year.

Us dollar and canadian dollar : You are trying to decide whether to buy some laptop computers for your business in either Canada or in United States. Looking at identical machines on the Dell Canada and the Dell US web sites, you find that they sell for US $2000 (US dollars) in ..

Determine the direct labor rate variance : In the following calculations that involve variances, indicate whether a variance is favorable (F) or unfavorable (U) and determine the direct labor rate variance and the direct labor efficiency variance for the year.

Determine the direct materials price variance : Determine the direct materials price variance and the direct materials efficiency variance for the year.

Range-variance-standard deviation : Find out the range (R), variance (V) and standard deviation (s) for the given set of values:

Find out perfectly equal distribution : Suppose that a perfectly equal distribution of income existed in Disneyland. Which of the reccent residents would have the same income he or she has in present distribution?

User Account

All Pages