If the Inflation Rate in the United States Is Higher

question 44

Multiple Choice

If the inflation rate in the United States is higher than that in Germany and productivity is growing at a slower rate in the United States than it is in Germany,in the long run,

• A) the euro should appreciate relative to the dollar.
• B) the euro should depreciate relative to the dollar.
• C) there should be no change in the euro price of dollars.
• D) it is not clear what will happen to the euro price of dollars.