Given a Current Spot Rate of 8

question 9

Multiple Choice

Given a current spot rate of 8.10 Norwegian krone per U.S. dollar, expected inflation rates of 6% in Norway and 3% per annum in the U.S., use the formula for relative purchasing power parity to estimate the one-year spot rate of krone per dollar.

• A) 7.87 krone per dollar
• B) 8.10 krone per dollar
• C) 8.34 krone per dollar
• D) There is not enough information to answer this question.

---

Definitions:

Confirmation Bias

The inclination to seek out, understand, prefer, and remember information in a manner that reaffirms one’s already held beliefs or theories.

External Attribution

The process of assigning the cause of behavior to some situation or event outside a person's control rather than to some internal characteristic.

Situational Components

Elements of an environment or context that can influence individuals' behavior, thoughts, and feelings in a given situation.

Attributions

The process of explaining the causes of behaviors and events, which can be internal (personal factors) or external (situational factors).