According to the purchasing power parity theory, a rise in the United States price level of 5 percent, and a rise in the Mexican price level of 6 percent cause

A) the dollar to appreciate 1 percent relative to the peso.
B) the dollar to depreciate 1 percent relative to the peso.
C) the dollar to depreciate 5 percent relative to the peso.
D) the dollar to appreciate 5 percent relative to the peso.


A

Economics

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Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1

A) The price rise is consistent with a perfectly elastic supply for frisbees. B) The price rise is consistent with a perfectly elastic demand for frisbees. C) The price rise is consistent with a downward-sloping supply curve for frisbees. D) The price could never rise this much, so this situation cannot happen.

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Noise traders

A) tend to lose money on stock trades, but help to stabilize the market. B) tend to make higher returns than do "buy-and-hold" investors. C) create additional risk in the market by increasing price fluctuations. D) trade only when they have inside information.

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A cross-price elasticity value that is negative will always indicate goods that are substitutes.

a. true b. false

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Refer to the graph above for a private closed economy. In this economy, investment is:



A.  $50 billion
B.  $100 billion
C.  $150 billion
D.  $200 billion

Economics