During 2011,the Price Level in the U

question 42

Multiple Choice

During 2011,the price level in the U.S.rose at a faster rate than the price level in Japan.Other things the same,according to purchasing-power parity,this difference in inflation rates should have caused

• A)the nominal exchange rate of the dollar to appreciate relative to the yen.
• B)the real exchange rate of the dollar to appreciate relative to the yen.
• C)the nominal exchange rate of the dollar to depreciate relative to the yen.
• D)the real exchange rate of the dollar to depreciate relative to the yen.

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Definitions:

Sale On Account

A transaction where goods are sold and payment is to be made at a later date.

Equity

The value of an owner's interest in a company, calculated as the difference between the company's assets and liabilities.

Assets

Economic resources owned or controlled by a business or individual that are expected to bring future benefits.

Liabilities

Financial obligations or debts a company owes to others that must be paid in the future.