According to Purchasing-Power Parity,if Over the Course of a Year

question 28

Multiple Choice

According to purchasing-power parity,if over the course of a year the price level in the U.S.rises more than in Canada,then which of the following rises?

• A)the U.S.real exchange rate,but not the U.S.nominal exchange rate
• B)the U.S.nominal exchange rate,but not the U.S.real exchange rate
• C)the U.S.nominal exchange rate and the U.S.real exchange rate
• D)neither the real exchange rate nor the nominal exchange rate

---

Definitions:

Average Variable Cost

The cost per unit of producing additional units, excluding fixed costs, and is calculated by dividing total variable costs by the quantity of output.

Total Costs

The complete sum of all expenses a business incurs to produce its goods or services, including both fixed and variable costs.

Output

The cumulative quantity of products or services generated by a corporation, sector, or nation.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced; represents the per unit cost of production.