If the Purchasing Power of a Dollar Is Greater Than

question 204

Multiple Choice

If the purchasing power of a dollar is greater than the purchasing power of the yen,purchasing power parity would predict that

• A)in the short run,exchange rates will move to equalize the purchasing power of the dollar and the yen.
• B)in the long run,exchange rates will move to equalize the purchasing power of the dollar and the yen.
• C)in the long run,interest rates will move to equalize the purchasing power of the dollar and the yen.
• D)in the short run,interest rates will move to equalize the purchasing power of the dollar and the yen.

---

Definitions:

Inventory Purposes

Refers to the reasons a company maintains inventory, which typically include meeting customer demand, ensuring production continuity, and managing supply chain risks.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business.

Fixed Assets

Long-term tangible assets used in the operations of a business and not expected to be converted to cash in the near term.

Times Interest Earned

Times Interest Earned is a financial ratio that measures a company's ability to meet its debt obligations based on its current earnings before interest and taxes (EBIT).