Suppose That the Price of a Television Set Is $10

question 24

Multiple Choice

Suppose that the price of a television set is $10 in the United States and 1,500 yen in Japan. If the current exchange rate is 100 yen to the dollar, then purchasing power parity would predict that in the long run:

• A) the price in Japan increases.
• B) the price in the U.S. decreases.
• C) the price in Japan decreases.
• D) the price in the U.S. and Japan will remain unchanged.

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Definitions:

Paycheck

A check issued to an employee in payment for their work.

Apostrophes

Punctuation marks used to indicate either possession (e.g., Harry’s book) or the omission of letters or numbers (e.g., can’t for cannot).

Bicycle

A bicycle is a human-powered, pedal-driven vehicle with two wheels attached to a frame, one behind the other.

Fair Die

A die that has an equal probability of landing on any of its faces when thrown.