If Prices in the United States Rise Less Rapidly Than

question 104

Multiple Choice

If prices in the United States rise less rapidly than in Canada, which one of the following would be expected according to purchasing power parity?

• A) The value of the Canadian dollar will decline, relative to the U.S. dollar.
• B) The value of the U.S. dollar will decline, relative to the Canadian dollar.
• C) Inflation in the U.S. will exceed inflation in Canada.
• D)The exchange rate will be unaffected by the price changes.

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Definitions:

Classical Conditioning

A method of acquiring knowledge through the linkage between an external stimulus and an innate stimulus, which yields a reactive behavior.

Positive Reinforcement

A method in behavior modification that involves rewarding a desired behavior, thereby increasing the likelihood that the behavior will happen again.

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus following a behavior increases the likelihood of that behavior being repeated.

Positive Reinforcement

An increase in the future frequency of a behavior due to the addition of a stimulus immediately following a response.