A) more goods in foreign countries than in the United States.
B) as many goods in foreign countries as it does in the United States.
C) fewer goods in foreign countries than it does in the United States.
D) None of the above is implied by purchasing-power parity.
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Correct Answer
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A) .938 If the exchange rate is less than this,it costs more dollars to buy a tall latte in the U.S.than in the Euro area.
B) .938 If the exchange rate is less than this,it costs fewer dollars to buy a tall latte in the U.S.then in the Euro area.
C) 1.067 If the exchange rate is less than this,it costs more dollars to buy a tall latte in the U.S.than in the Euro area.
D) 1.067 If the exchange rate is less than this,it costs fewer dollars to buy a tall latte in the U.S.than in the Euro area.
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Correct Answer
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A) The price level in the United States rises more rapidly than that in Ireland and the real exchange rate defined as Irish goods per unit of U.S.goods stays the same.
B) The money supply in the United States rises more rapidly than in Egypt and the nominal exchange rate defined as Egyptian pounds per dollar falls.
C) Earl,a worldwide traveler,looks at exchange rates and worldwide breakfast prices one morning and finds that whatever country he decides to go to he can convert $15 into enough local currency to buy the same breakfast.
D) All of the above are correct.
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A) prices in the short run.
B) prices in the long run.
C) exchange rates in the short run.
D) exchange rates in the long run.
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Correct Answer
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A) more than one,so a profit could be made by buying jeans in Algeria and selling them in the U.S.
B) more than one,so a profit could be made by buying jeans in the U.S.and selling them in Algeria.
C) less than one,so a profit could be made by buying jeans in Algeria and selling them in the U.S.
D) less than one,so a profit could be made by buying jeans in the U.S.and selling them in Algeria.
Correct Answer
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Correct Answer
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A) 1.106.If purchasing-power parity held the nominal exchange rate would be higher.
B) 1.106.If purchasing-power parity held the nominal exchange rate would be lower.
C) .904.If purchasing power parity held the nominal exchange rate would be higher.
D) .904.If purchasing-power parity held the nominal exchange rate would be lower.
Correct Answer
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A) appreciated,indicating inflation was higher in the U.S.than in India.
B) appreciated,indicating inflation was lower in the U.S.than in India.
C) depreciated,indicating inflation was higher in the U.S.than in India.
D) depreciated,indicating inflation was lower in the U.S.than in India.
Correct Answer
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Correct Answer
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