Assume that the United States faces a percent inflation rate while no – McqOptions

MCQOPTIONS

1.	Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?
A.	appreciate by 8 percent against the yen
B.	depreciate by 8 percent against the yen
C.	remain at its existing exchange rate
D.	None of the above
Answer» C. remain at its existing exchange rate

Discussion

No Comment Found

Related MCQs

Which example of market expectations causes the dollar to depreciate against the yen – expectation that the U.S economy will have ?
Which example of market expectations causes the dollar to appreciate against the yen– expectations that the U.S economy will have ?
When the price of foreign currency (the exchange rate) is above the equilibrium level ?
When the price of foreign currency (i.e the exchange rate) is below the equilibrium level ?
Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an) ?
Under a system of floating exchange rates relatively high productivity and low inflation rates in the United States results in a (an) ?
The relationship between the exchange rate and the prices of tradable goods is known as the ?
The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?
The high foreign exchange value of the U.S dollar in the early 1980s can best be explained by ?
The exchange value of the U.S dollar is primarily determined by ?