Between 1973 and 1999,annual Inflation in Developing Nations That Export

question 106

Multiple Choice

Between 1973 and 1999,annual inflation in developing nations that export mainly manufactured goods averaged 23%,while inflation averaged 59% in countries that export mainly raw materials.Other things being equal,the PPP theory would predict that,in the long run,the currencies of the raw materials exporting countries should have

• A) been approximately stable relative to the currencies of countries exporting manufactured goods.
• B) appreciated relative to the currencies of countries exporting manufactured goods.
• C) depreciated relative to the currencies of countries exporting manufactured goods.
• D) had no predictable relationship to the currencies of countries exporting manufactured goods.
• E) been perfectly stable relative to the currencies of countries exporting manufactured goods because they maintained fixed exchange rates.

---

Definitions:

Consumer Purchases

Transactions involving individuals buying goods and services for personal use from producers or vendors.

GDP

Gross Domestic Product; a measure of the economic performance of a country, representing the total value of all goods and services produced over a specific time period.

National Output

The total value of all goods and services produced by a country's economy over a specific time period, often used to measure economic performance.

Expenditure Approach

A method of calculating GDP that sums up all expenditures in the economy, including consumption, investment, government spending, and net exports.