If the Rate of Inflation in Country a Is Higher

question 66

Multiple Choice

If the rate of inflation in Country A is higher than in Country B,then ________.

• A)in nominal terms,country A's currency should depreciate
• B)in nominal terms,country B's currency should depreciate
• C)the law of one price will not hold
• D)purchasing power parity does not apply

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Definitions:

Pka Values

A quantitative measure that indicates the strength of an acid in solution, representing the acid's ability to donate a proton.

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to no net change in the concentrations of reactants and products.

Aldol Condensation

A chemical reaction that combines two aldehyde or ketone molecules to form a larger β-hydroxyketone, followed typically by dehydration to yield a conjugated enone.

Claisen Condensation

A carbon-carbon bond forming reaction between two esters or one ester and another carbonyl compound in the presence of a strong base.