According to PPP Theory,the Yen Price of the Dollar Would

question 27

Multiple Choice

According to PPP theory,the yen price of the dollar would rise in a year from 130 to 135 yen if along with a U.S.inflation rate of 6 percent,the Japanese inflation rate is ________ percent.

• A)11.00
• B)1.00
• C)23.08
• D)2.15
• E)9.85

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Definitions:

Marginal Cost

The change in total production cost that comes from making or producing one additional unit of a good or service.

Fixed Cost

Costs that do not change with the level of output produced, such as rent and salaries.

Profits

The financial gain obtained when the revenue from business activities exceeds expenses, costs, and taxes.

Collusion

An agreement, usually secretive, between two or more parties to limit competition and manipulate prices for their benefit.