International Monetary Economy - Assignment Example

PPP and the exchange rate are almost similar, 1 and 1.33. This shows that the value of the Canadian is almost equal to the American dollar. This shows that the Canadian consumers and the American consumers have an equal PPP with their respective currencies. The exchange rate will be stable. PPP= Price in Denmark/Price in U.S=8.08. Comparing the PPP and the exchange rate between Denmark and America is 5.82. The value of the Canadian dollar is undervalued. The Canadian consumers have a loss of the PPP relative to the American consumers.

The exchange rate will increase. iTunes price in U.S is 0.99 compared to the price in Euro of 0.99. The PPP between the two countries is 1. The exchange rate between U.S and Euro is $1=0.78 pounds. The value of Euro pound is almost equal with value of the American pound. The Euro and American consumers have almost equal PPP with their respective currencies. The exchange rate between the two countries will be constant (Tanzi and Gupta 145). iTunes price in U.S is 0.99 compared to the price in Japan’s 200 Yen.

The PPP between the two nations is 202. The exchange rate of the Japanese Yen compared to the American dollar of 112. There is a loss of PPP of the Japanese consumers relative to the U.S consumers. The exchange rate will increase. iTune price in U.S is 0.99 compared to the price of the iTunes in Sweden of SKr is 9. The PPP of the two countries is 9.10. The PPP of the two countries is almost similar, but not exact. The Sweden consumers and the American consumer have an equal PPP with their respective currencies.

However, the exchange will increase between the two countries. iTunes price in U.S is 0.99 compared to the price of the iTune prices in Switzerland SKr is 1.50. The PPP of the two countries is 1.52. The PPP of the two countries is almost similar, but not equal. The exchange rate of the two countries will remain as1.21 or slightly high. iTunes