According to Purchasing-Power Parity, When a Country's Central Bank Decreases

question 56

Multiple Choice

According to purchasing-power parity, when a country's central bank decreases the money supply, a unit of money

• A)gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.
• B)gains value in terms of the domestic goods and services it can buy, but loses value in terms of the foreign currency it can buy.
• C)loses value in terms of the domestic goods and services it can buy, but gains value in terms of the foreign currency it can buy.
• D)loses value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.

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Definitions:

Bill

A draft of a proposed law presented to a legislature for discussion and approval.

Teleological View

A perspective that interprets actions or events in terms of their purpose or goal rather than their cause.

Mechanistic

Pertaining to a viewpoint or theory that likens complex systems to mechanical objects, assuming all phenomena result from physical forces and can be explained by the laws of physics.

Kant's Two Worlds

Refers to Immanuel Kant's distinction between the phenomenal world (which we can know through senses) and the noumenal world (the thing in itself, which we cannot directly know).