Purchasing Power Parity If the Current Spot Rate Between the U.S.dollar

question 69

Multiple Choice

Purchasing Power Parity If the current spot rate between the U.S.dollar and the Swedish krona was $1 = 7.5423 krona,and if the inflation rate in the United States was 5 percent and in Sweden it was 2 percent,then what would be the expected spot rate in one year?

• A)$0.1366
• B)$0.1326
• C)$7.7487
• D)$0.1356

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Definitions:

Phillips Curve Relationship

This relationship indicates an inverse correlation between unemployment rates and inflation, suggesting that lower unemployment leads to higher inflation and vice versa.

Economists

Professionals who study the production, distribution, and consumption of goods and services, often analyzing economic issues and trends.

Trade-offs

The evaluation and choice between competing alternatives in situations where having one benefit often means giving up another.

Government Purchases

Expenditures made by the government for goods and services that are consumed by the public or that have a direct impact on the economy's aggregate demand.