|
Author |
Message |
|
TAGS:
|
|
|
SVP
Joined: 30 Sep 2004
Posts: 1547
Location: Germany
Followers: 4
Kudos [?]:
15
[0], given: 0
|
in country x, a decrease in the average currency exchange [#permalink]
 16 Feb 2005, 02:47
Question Stats:
0% (00:00) correct
 0% (00:00) wrong based on 0 sessions
in country x, a decrease in the average currency exchange rate - CER - of 2% or an increase of the average mortgage rate - AMR - of 1% is reflected as a 10-point increase in the national retail price index. during one month , both the CER and the AMR increased by 1%. what would be the expected change in the national retail price index ?
a -5
b 0
c +5
d +10
e +15
|
|
|
|
|
|
|
VP
Joined: 13 Jun 2004
Posts: 1134
Location: London, UK
Schools: Tuck'08
Followers: 5
Kudos [?]:
14
[0], given: 0
|
fast answer : C
CER 1% -> -5pts
AMR 1% -> 10 pts
I am not sure I understood well the problem 
|
|
|
|
|
|
Manager
Joined: 08 Oct 2004
Posts: 224
Followers: 0
Kudos [?]:
8
[0], given: 0
|
Yeah I was also guessing 5, but there doesnt seem to be any logic for the 5 point decrease if there is a 1% increase on the CER.
_________________
Believe in yourself.
|
|
|
|
|
|
Manager
Joined: 13 Feb 2005
Posts: 63
Location: Lahore, Pakistan
Followers: 1
Kudos [?]:
0
[0], given: 0
|
2% dec CER yields +10 ---->1% dec CER yields +5, hence 1% inc = -5
1% inc AMR yields +10
so 10-5 = +5
yeah..its C
|
|
|
|
|
|
Current Student
Joined: 28 Dec 2004
Posts: 3439
Location: New York City
Schools: Wharton'11 HBS'12
Followers: 11
Kudos [?]:
134
[0], given: 2
|
C it is....
If AMR increase by 1% that leads to a 10point increase....end of story...AMR increased by 1% therefor price index should increase by 10 points! if CER decrese prince index increases....by 10 points, if CER increases price point decreases....therefor 1% CER increase leades to -5 reduction in the index!
10-5=5
|
|
|
|
|
|
VP
Joined: 13 Jun 2004
Posts: 1134
Location: London, UK
Schools: Tuck'08
Followers: 5
Kudos [?]:
14
[0], given: 0
|
Christoph, I think I got it : it's D right ?
We just have 2 elements :
if there is a decrease in the average currency exchange rate - CER - of 2% -> 10-point increase in the national retail price index.
OR
if there is an increase of the average mortgage rate - AMR - of 1% -> 10-point increase in the national retail price index.
so we can not assume the effects if there is :
an increase of CER
a decrease of AMR
it would just be assumptions
Moreover the 2 conditions are linked with "OR" wich means that one condition is enough to get the result, and as we don't know the consequences of a 1% increase in CER...
just the increase of AMR is verified so it leads to answer D
|
|
|
|
|
|
SVP
Joined: 18 Nov 2004
Posts: 1544
Followers: 2
Kudos [?]:
9
[0], given: 0
|
"D" for me.
We know that only a decrease in CER makes the national point to go up, so I think we shud only consider the increase in AMR which wud effect, which will be +10.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
close
