If the Purchasing Power of the Dollar Is Greater Than

question 88

Multiple Choice

If the purchasing power of the dollar is greater than the purchasing power of the euro,purchasing power parity predicts that the exchange rate will

• A)increase if the exchange rate is greater than 1 euro per dollar.
• B)decrease if the exchange rate is less than 1 euro per dollar.
• C)be equal to the relative purchasing power across the currencies in the long run.
• D)not fluctuate and stay constant in the long run.

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Definitions:

Capacity Utilization

The percentage of a country's production capacity that is actually being used over a certain period of time, indicating the overall economic activity and efficiency.

Labor Unemployment

A situation where individuals who are willing and able to work are unable to find employment, often measured by the unemployment rate.

Employment Discrimination

Unfair treatment of employees or job applicants based on race, age, gender, religion, national origin, physical or mental disability, or sexual orientation, among other factors.

Underemployment

Failure to use our resources efficiently. A situation in which workers are employed in positions requiring less skill and education than they have or other resources are not employed in their most productive use.