Prices in Both the U

question 286

Multiple Choice

Prices in both the U.S. and China rise, but prices in China increase by a smaller percentage. According to purchasing-power parity the U.S. dollar

• A)gains value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.
• B)gains value in terms of the domestic goods and services it can buy, but loses value in terms of the Chinese currency it can buy.
• C)loses value in terms of the domestic goods and services it can buy, but gains value in terms of the Chinese currency it can buy.
• D)loses value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.

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