Module 5 response MBA575

Module5 response MBA575

Module5 response MBA575

Response1 on Discussion 1

I like thediscussion made by Alanna. It is so gratifying the way she explainsthe purchasing power parity. The discussion is interesting as thereader can get the main ideas right from the first sentence. Thepurchasing strength of the dollar will vary in different countries.Some countries will have the purchasing power of the dollar being thesame (Su &amp roca, 2014). In such a case, the currencies are saidto be at par. This explanation is consistent with that given byAllana concerning equilibrium of coins. I loved the part that Alannadiscusses on how inflation occurs. I appreciate the fact that anincrease in money supply leads to depreciation of the U.S dollar. Ilike her observation as she could identify the nations that the U.SDollar is ever high.

Response2 on Discussion 2

I acclaim the definition that Christine gives concerning thepurchasing power parity. I appreciate Christine’s attempt tointerrelate the gross national income, economic development and thelaw of price with the purchasing power parity. It is the function ofthe Federal Reserve Bank to control the circulation of money (Kim, &ampmoh, 2012). Inflation is used to increase the supply of money, andthis conforms to the discussion made by Christine. I like the examplethat Christine has given on the basket of food to illustrate howbarter trade can replace the use of money. The idea shows that therecan as well be an alternative to trading in case citizens have nocurrency. I concur with Christine that the increasing population willlead to an increase in expenditure in the future. I feel thatChristine has made a comprehensive discussion as it depicts whatpurchasing power parity is. I fully support her idea that there is aneed for people to be taught that purchasing power can be regardingmoney and not money alone.

References

Kim, h., &amp moh, y. K. (2012). Examining the evidence ofpurchasing power parity by recursive mean adjustment. Economicmodeling, 29(5), 1850-1857.

Su, j. J., &amp roca, e. (2014). Does purchasing power parityhold? New evidence from wild-bootstrapped nonlinear unit root testsin the presence of heteroskedasticity. Economic modeling, 36,161-171.