If inflation in country A exceeds inflation in country B, purchasing power parity implies that:
A. the inflation rate in country B will rise to match the inflation rate in country A.
B. the inflation rate in country A will fall to match the inflation rate in country B.
C. the currency of country A will depreciate relative to the currency of country B.
D. the currency of country B should depreciate relative to the currency of country A.
Answer: C
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The main difference between a sterilized intervention and unsterilized intervention in the foreign exchange market is:
A) a sterilized intervention is coordinated with other nations B) an unsterilized intervention does not change the exchange rate C) an unsterilized intervention does not change the monetary base D) a sterilized intervention does not change the monetary base
________ occurs when price- and quantity-fixing agreements among producers are implicit.
A. A price-leadership model B. Tacit collusion C. A Cournot model D. A monopoly