The Table Given Below Reports the Inflation Rate in the U.S

question 44

Multiple Choice

The table given below reports the inflation rate in the U.S. and Canada for two years.
Table 8.1
$\begin{array}{|c|c|c|}\hline & \text { United States } & \text { Canada } \\\hline \text { Inflation Rate (year 1) } & 0 \% & 0 \% \\\hline \text { Inflation Rate (year 2) } & 0 \% & 3.6 \% \\\hline\end{array}$
-Refer to Table 8.1. Assume that the exchange rate is fixed at 1.4 CAD = 1 USD and that price changes for lumber are identical to the inflation rate for each country. If Canadian lumber is sold in year 1 for 5,500 CAD, what is the price of that lumber in year 2, given that exchange rates do not change?

• A) 5,500 CAD
• B) 7,977 CAD
• C) 5,698 CAD
• D) 7,700 CAD
• E) 9,700 CAD

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