QUESTION 22 According to the doctrine of purchasing-power parity, which of the f

Question

QUESTION 22 According to the doctrine of purchasing-power parity, which of the following should depreciate if over the next year the inflation rate is higher in the U S, than in the Euro area? O a neither the U.S. nominal exchange rate nor the U.S real exchange rate O b. the U.S nominal exchange rate, but not the U'S, real exchange rate c. the US. real exchange rate, but not the U.S nominal exchange rate O d both the U.S real exchange rate and the U.S. nominal exchange rate QUESTION 23 Ifpurchasing power paraty benveen France and the US. bolds, bat thens s prices O a the real exchange rate is below its parity value. A decrease in the nominal exchange rate can move it back back parity value. An increase in the nominal exchange rate can move it back value. A decrease in the nominal exchange rate can move it back ? ? the real exchange rates below sts purchasing-power pary value An m rease m the nominal exchange rate can move O c the real exchange rate is above its O d the real exchange rate is above its parchasing-power parity QUESTION 24 parity holds, when a country's central bank decreases the money supply, its If O a price level nses and its carrency appreciates relative to other currencies in the world O b price level falls and its currescy appreciates relative to otber currencies in the world O c price level rises and its currency depreciates relative to other currencies in the world o d price level falls and its currency depreciates relative to other curencies in the world QUESTION 25 is the According to o a 2 pounds per dollar b I pound per dollar Click Save and Submit to save and submir. Ctick Save All Anscers to save all an

Explanation / Answer

Ans-22. the U.S. nominal exchange rate, but not the U.S. real exchange rate OPTION (B)

Ans-23. the real exchange rate is above its purchasing-power parity value. A decrease in the nominal exchange rate can move it back.

OPTION (A)

Ans-24. its price level (falls) and its currency (appreciates) relative to other currencies in the world.

OPTION (B)

Ans-25. 1/2 pound per dollar OPTION (C)

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