According to Purchasing-Power Parity,if Prices in Canada Increase by a Larger

question 166

Multiple Choice

According to purchasing-power parity,if prices in Canada increase by a larger percentage than prices in Algeria,how does the exchange rate change?

• A) The real exchange rate,defined as Algerian goods per unit of Canadian goods,rises.
• B) The real exchange rate,defined as Algerian goods per unit of Canadian goods,falls.
• C) The nominal exchange rate,defined as Algerian currency per dollar,rises.
• D) The nominal exchange rate,defined as Algerian currency per dollar,falls.

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