Answer:
Explanation:
Given that:
a)
1$ = Can $1.12
It takes a value of 1 U.S dollar to have 1.12 Canadian dollars. This signifies that the U.S dollar is worth more than Canadian dollars.
b)
Assuming that the absolute Purchasing Power Parity PPP holds,
Since 1$ = Can $1.12, the cost in the United States of an Elkhead beer, if the price in Canada is Can$2.85 can be determined to be:
= 
= $2.545
c)
Yes, the U.S. dollar is selling at a premium relative to the Canadian dollar.
This is because we are being told that the spot exchange rate for the Canadian dollar is Can $1.12 & in six (6) months time the forward rate will be Can $1.14.
d)
The U.S dollar is expected to appreciate in value because it is trading at a premium in the forward market.
e)
Canada has higher interest rates. This determined by using the formula:
= 
where; n= numbers of years = 6 month/12 month = 0.5 year
Then;
= 0.0356
= 3.56%
Answer:
Inside the Production Possibility Frontier.
Explanation:
PPF is a curve that shows the various combination of 2 goods that an economy produces when resources are fixed. Thus, any point or bundle inside the production possibility frontier shows inefficiency in the production while the point on the production possibility frontier shows the efficient production from the available resources. But, the point outside the PPF exhibits a non-achievable point.
HR organizations, mainly.
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hope this helped
Answer:
The correct answer is: Typically, some resources are better suited for producing one good than another, which means that there are diminishing returns when moving such resources away from producing what they are best suited for.
Explanation:
A production possibility curve shows the different combinations of two goods that can be produced using all the given resources. Since resources are scarce, to increase the production of one good we need to decrease production of the other.
But resources are specialized and cannot be perfectly substituted between their two uses. So as we go on increasing production of one good the opportunity cost of sacrificing its alternative goes on increasing.
Because of this increasing opportunity cost the shape of the frontier is downward sloping, bent outwards and concave to the origin.
Answer:
<u>lower return </u>
Explanation:
an additionl unit of capital will have a <u>lower return</u> in Alpha compared to Beta
The diminishing return theory explains that if a factor is added, while the other remains the same, the return for each additional quantity added will be lower. So if both countries have the same amount of factor, Alpha adding more capital will not have the same return as doing it in Beta
ΔCapital/(40,000 + labor + land) < ΔCapital/(5,000 + labor + land)
That's because the divisor ir greater in Alpha it is required a higher amount of capital to produce the same return.
