If the Purchasing Power of a Dollar Is Less Than

question 60

Multiple Choice

If the purchasing power of a dollar is less than the purchasing power of the Mexican peso,purchasing power parity would predict that

• A) in the short run, the dollar will appreciate relative to the peso to equalize the purchasing power of the dollar and the peso.
• B) in the short run, the dollar will depreciate relative to the peso to equalize the purchasing power of the dollar and the peso.
• C) in the long run, the dollar will appreciate relative to the peso to equalize the purchasing power of the dollar and the peso.
• D) in the long run, the dollar will depreciate relative to the peso to equalize the purchasing power of the dollar and the peso.

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Definitions:

Commercial Large-Scale

Pertaining to production or operations conducted on a wide, extensive scale, primarily for economic gain.

Sport Fishing

The recreation of catching fish for pleasure or competition, as opposed to commercial fishing.

Sewage

Wastewater that typically contains contaminants and is produced by residential, industrial, and commercial establishments, requiring treatment before being released into the environment.

Natural Extinction

The process by which species become extinct due to natural factors such as environmental changes, loss of habitat, or failure to adapt to competition.