Suppose purchasing power parity holds. If in 1997 the price level in the United States is 100, the price level in Japan is 10,000, and the nominal exchange rate is 100 yen per dollar, while in 1998 the price level in Japan rises to 10,500 and the

nominal exchange rate rises to 105, then the price level in the United States in 1998 must be A) 95.
B) 100.
C) 105.
D) 110.25.

B

Economics

You might also like to view...

Suppose the supply of coal is perfectly inelastic, and the price elasticity of demand for coal is -0.4

If the government imposes a binding price ceiling for coal at a price that is 20 percent below the market equilibrium price, what is the impact of this policy on the market quantity? A) Excess demand equals 80 percent of the market equilibrium quantity B) Excess demand equals 8 percent of the market equilibrium quantity C) Excess demand equals 16 percent of the market equilibrium quantity D) The policy does not affect the market quantity

Economics

Inflation targeting usually increases the uncertainty about the course of action of central banks, as perceived by the general public

a. True b. False Indicate whether the statement is true or false

Economics