If Prices in the United States Rise Less Rapidly Than

question 72

Multiple Choice

If prices in the United States rise less rapidly than in Canada,which 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:

Alfred Binet

A French psychologist best known for developing the first intelligence tests in the early 20th century.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases.

Large Positive

An expression indicating a significantly positive aspect, result, or feedback; it often suggests a considerable degree of positivity or benefit.

Intelligence Test Scores

Quantitative measures derived from standardized tests designed to assess human intelligence and cognitive abilities.