If the USInflation Rate Is 3 Percent Annually and the Japanese Inflation

question 28

Multiple Choice

If the U.S.inflation rate is 3 percent annually and the Japanese inflation rate is 1 percent annually,by what percent would the dollar price of the yen need to change according to purchasing power parity?

• A) Appreciate by 2 percent
• B) Appreciate by 1 percent
• C) Depreciate by 2 percent
• D) Appreciate by 3 percent
• E) Depreciate by 1 percent.

---

Definitions:

Cash Increase

The rise in the amount of cash and cash equivalents that a company has during a particular period, often resulting from operational activities, financing, or investments.

Statement of Cash Flows

A document that outlines the overall cash income from both the operational efforts and investment income of a company, and the expenditure on business activities and investment payments over a specified period.

Operating Activities

Activities related to the day-to-day functions of a business involved in producing and selling its products or services.

Indirect Method

A method used for the cash flow statement that starts with net income and adjusts for changes in account balances that affect available cash.