One Year Ago the Spot Rate of U

question 29

Multiple Choice

One year ago the spot rate of U.S. dollars for Canadian dollars was $1/C$1. Since that time the rate of inflation in the U.S. has been 4% greater than that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately:

• A) $0.96/C$.
• B) $1/C$.
• C) $1.04/C$.
• D) Relative PPP provides no guide for this type of question.

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Definitions:

Rigid Either/Or

A cognitive distortion where situations are viewed in a binary manner, without acknowledging a spectrum of possibilities or nuances.

Linked To Suicide

Refers to factors or conditions that have a direct or indirect association with increasing the risk of suicide.

Guilt

An emotional state that occurs when a person believes or perceives they have done something wrong or failed to do something right.

Sadness

A state of unhappiness or sorrow, typically resulting from a specific cause or event.