If the Parity Ratio Goes from 1 to 0

question 240

Multiple Choice

If the parity ratio goes from 1 to 0.8, it means that the prices received by farmers had

• A)fallen by 20 percent relative to the prices they paid.
• B)fallen by 25 percent relative to the prices they paid.
• C)risen by 20 percent relative to the prices they paid.
• D)risen by 25 percent relative to the prices they paid.

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Definitions:

Exchange Rate

The price at which one currency can be exchanged for another, influencing international trade and investment.

Dollar Price

The dollar price indicates the amount of U.S. currency required to purchase a good, service, or asset.

Japanese Yen

The official currency of Japan, symbolized as ¥ and known in international finance as JPY.

Goods and Services Deficit

A situation where the value of a country's imports of goods and services exceeds the value of its exports.