On Behalf of Your Firm, You Make Frequent Trips to Singapore

question 400

Multiple Choice

On behalf of your firm, you make frequent trips to Singapore. You notice that you always have to pay more dollars to get enough local currency to get your nails manicured than you have to pay to get manicured in the United States. This is

• A)inconsistent with purchasing-power parity, but might be explained by limited opportunities for arbitrage in manicuring across international borders.
• B)consistent with purchasing-power parity if prices in Hong Kong are rising more rapidly than prices in the United States.
• C)consistent with purchasing-power parity if prices in Hong Kong are rising less rapidly than prices in the United States.
• D)None of the above is correct.

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Definitions:

Cytoplasm

The jelly-like substance within a cell, excluding the nucleus, that contains organelles, cytosol, and is the site of numerous biochemical reactions.

Nucleus

The central and most important part of an object, movement, or group, forming the basis for its activity and growth, or in cells, a membrane-bound organelle that contains the cell's chromosomes.

Cell Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, responsible for controlling the passage of substances in and out of the cell.

Substances

Materials or items with distinct physical or chemical properties.