Suppose That the Current Spot Exchange Rate of Canadian Dollars

question 43

Multiple Choice

Suppose that the current spot exchange rate of Canadian dollars for Russian rubles is $0.15/1ruble. The price of Russian-produced goods increases by 8 percent, and the Canadian price index increases by 3 percent. According to PPP, the 8 percent rise in the price of Russian goods relative to the 3 percent rise in the price of Canadian goods results in a(n)

• A)depreciation of the Russian ruble by 5 percent.
• B)depreciation of the Russian ruble by 6 percent.
• C)appreciation of the Russian ruble by 5 percent.
• D)appreciation of the Russian ruble by 6 percent.
• E)depreciation of the Russian ruble by 7 percent.

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Definitions:

Land

A natural resource representing the earth's surface, not manufactured or created by humans, and used for various purposes including agriculture, building, and development.

Machinery and Equipment

Long-term assets used in the operations of a business, not intended for sale.

Machinery and Equipment

Assets used in the production process of goods or services, including machines, tools, and technology.

Land Improvements

Land improvements encompass enhancements made to land such as landscaping, paving, and lighting, which increase the value and usability of the property but may depreciate over time.