Assume That the U

question 37

Multiple Choice

Assume that the U.S.inflation rate rate is higher than the New Zealand inflation rate.This will cause U.S.consumers to ______________ their imports from New Zealand and New Zealand consumers to ______________ their imports from the U.S.According to purchasing power parity (PPP) ,this will results in a(n) ___________ of the New Zealand dollar (NZ$) .

• A) reduce;increase;appreciation.
• B) increase;reduce;appreciation
• C) reduce;increase;depreciation
• D) reduce;increase;appreciation

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Definitions:

Perfect Complements

Goods that are consumed together in fixed proportions to fulfill a specific utility.

Convex Preferences

A set of consumer preferences that exhibit a specific property where mixtures of goods are preferred over singular extremes, displaying a curve outward towards the origin on a utility graph.

Weakly Convex

Describes a curve or set in geometry and mathematical functions that bulges outward less sharply than a perfectly convex shape, often applied in optimization problems.

Convex Preferences

A representation in economics of a consumer preference structure where a mix or combination of two goods is preferred over either of the two goods alone, indicating a desire for diversification.