According to the Purchasing Power Parity Theory, a Rise in Canada

question 36

Multiple Choice

According to the purchasing power parity theory, a rise in Canada 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

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Definitions:

Crude Oil

A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials.

Tractors

Agricultural machinery designed for plowing, tilling, and performing other tasks on farms to facilitate crop production.

Gain From Trade

The increase in utility or benefit that entities receive from trading goods or services with each other, often as a result of specialization and efficiency.

Barrels

A unit of measure for oil and other petroleum products, equal to 42 US gallons.