proportion of goods and services for the West African region. Previously hindered by years of mismanagement‚ economic reforms of the past decade have put Nigeria back on track towards achieving its full economic potential. Nigerian GDP at purchasing power parity more than doubled from $170.7 billion in 2005 to $374.3 billion in 2010‚ although estimates of the size of the informal sector (which is not included in official figures) put the actual numbers closer to $520 billion. Correspondingly‚ the
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used to evaluate forecasting performance. The forecasting results are reported in Section 4. Section 5 concludes and indicates why different studies provide different results on the issue. 2. An Overview and Classifications of Models a. Purchasing Power Parity (PPP) Model The PPP model explains the movements of the exchange rate between two economies’ currencies by the changes in the countries’ price levels. The goods-market arbitrage mechanism will move the exchange rate to equalise prices in
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What happened on Black Wednesday in 1992? (UK and Exchange Rate mechanism) Black Wednesday‚ 16 September 1992‚ was the day Britain crashed out of the ERM - a system for tying the pound and other currencies’ values to that of the German mark‚ and was a precursor to the creation of the single European currency. Prime Minister John Major and Chancellor Norman Lamont raised interest rates during the day from 10% to 12% to 15% and authorised the spending of billions of pounds in a doomed effort to keep
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Further‚ assume that the spot exchange rate is $1.05 per euro‚ and the interest rate on dollar deposits is 10 percent and on euro it is 4 percent. Under these assumptions‚ (a) Covered interest parity does hold. (b) Covered interest parity does not hold. (c) It is hard to tell whether covered interest parity does or does not hold. (d) Not enough information is given to answer the question. (e) None of the above. Answer: B (7) If the dollar interest rate is 10 percent and the euro interest rate
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Discuss the usefulness of GDP as a measure of living standards‚ and as a way of comparing living standards i) across countries ii) across time. Gross Domestic Product (GDP) is the total market value of all goods and services produced in a country in a given year. It is equal to the total consumer‚ investment and government spending‚ plus the value of exports‚ minus the value of imports. The GDP report is released on the last day of each quarter and reflects the previous quarter. However‚ GDP
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The Philippines is located in South East Asia and the Philippines economy has been industrialized in the recent times. In terms of the purchasing power parity it ranked 24th according to the World Bank. The sectors that are of key importance in the Philippines Economy are agriculture‚ industry and mining each of which can be detailed under the following heads; Agricultural sector contributes about 17.1% of the GDP‚ Industrial Sector contributes 18.1% in the GDP. “The Gross Domestic product (GDP)
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PRICING OF A COMPANY CASH MANAGEMENT If a company knew that a country’s currency where a subsidiary was based were going to fall in value‚ it would want to do a number of things: - reduce cash holdings in this currency to a minimum by purchasing inventories or other real assets - subsidiary should try to avoid extended trade credit (account receivable) Subsidiary should try to obtain extended credit terms Company may also want to borrow in local currency to replace any advances made by
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is measured by life expectancy. Knowledge is measured by a combination of adult literacy (two-thirds weight) and mean years of schooling (one-third weight). Standard of living is measured by purchasing power‚ based on real GDP per capita adjusted for the local cost of living (purchasing power parity‚ or PPP). How to Combine Indicators The breakthrough for HDI was to find a "measuring rod" for socio-economic achievement recorded in different units. The HDI sets aminimum and a maximum
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of Thailand’s major bank (Finance One). This coupled with the unsustainable peg on the baht to the dollar contributed to the collapse. Do you think the sudden collapse of the Thai baht can be explained by the purchasing power parity theorem? The PPP theory suggests that the purchasing power of two companies should be equal. The peg of the baht to the dollar clearly created an unfavorable shift. When the exports shifted to imports to sustain the massive construction efforts‚ the baht could not maintain
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1.0 Introduction Chatime is one of the biggest milktea manufacturers in Taiwan. Chatime was first introduced in 2003.Chatime strategy by combining both high quality tea with Taiwanese bubble pearl bring a big success to Chatime and makes it becomes the market leader of milktea drinks in several countries. The success of Chatime can be seen by it has so many outlets‚ 800 franchises‚ all around the world. They are Taiwan‚ Malaysia‚ Indonesia‚ US‚ Uk‚ Australia and 12 other countries besides South
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