Based on PPP and the Quantity Theory of Money, Everything

question 43

Multiple Choice

Based on PPP and the quantity theory of money, everything else remaining unchanged, if Japan's real income rises relative to real income in the U.S., there would be a(n) :

• A)appreciation of the dollar.
• B)appreciation of the yen.
• C)interest rate parity.
• D)decrease in the demand for yen in the foreign exchange market.

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Definitions:

Percentage Cost

This refers to the cost expressed as a percentage of the total amount or value involved.

Production Output

The total quantity of goods and services produced in a given time period by a firm or country.

Cash Sales Policy

A cash sales policy is a business approach where transactions are conducted strictly on a cash basis, without offering credit to customers.

Discount Period

The discount period is the time frame in which a payment can be made at a discounted rate from the regular price or before it becomes due.