Exchange rate And Purchasing Power Parity Theory Discussion


This assessment has two parts. Be sure to complete both parts before submitting.

Part 1
  • Analyze the concept of exchange rate.
    • Explain how the dollar price of euros is determined.
    • Identify a factor that can increase the dollar price of euros.
    • Identify a factor that can decrease the dollar price of euros.
    • Explain why a rise in the dollar price of euros means a fall in the euro price of dollars.
  • Explain the purchasing power parity theory of exchange rates, using the euro-dollar exchange rate as an example.
Part 2
  • Explain why a quota is more detrimental to an economy than a tariff that results in the same level of imports as the quota.
    • What is the net outcome of either tariffs or quota for the world economy?

Organize your assessment logically with appropriate headings and subheadings. Support your work with at least 3 scholarly or professional resources and follow APA guidelines for your citations and references. Be sure you include a title page and reference page.

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Additional Requirements

  • Include a title page and reference page.
  • Number of pages: 3–4, not including title page and reference page.
  • Number of resources: At least 3.
  • APA format for citations and references.
  • Font and spacing: Times New Roman, 12 point; double-spaced.


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