dolution

1. Describe the economic logic behind the theory of purchasing-power parity.

2. If the Fed started printing large quantities of U.S. dollars, what would happen to the number of Japanese yen a dollar could buy? Why?

3. How would the following transactions affect U.S. exports, imports, and net exports?

a. An American art professor spends the summer touring museums in Europe.

b. Students in Paris flock to see the latest movie from Hollywood.

c. Your uncle buys a new Volvo.

d. The student bookstore at Oxford University in England sells a copy of this textbook. e. A Canadian citizen shops at a store in northern Vermont to avoid Canadian sales taxes.