If Purchasing Power Parity Holds,then If the Price of a Basket

question 11

Multiple Choice

If purchasing power parity holds,then if the price of a basket of goods in the U.S.rose from $1,500 to $2,000 and the price of the same basket in Mexico rose from 12,000 pesos to 18,000 pesos

• A)inflation was higher in the U.S.than Mexico so the U.S.dollar would appreciate.
• B)inflation was higher in the U.S.than Mexico so the U.S.dollar would depreciate.
• C)inflation was lower in the U.S.than Mexico so the U.S.dollar would appreciate.
• D)inflation was lower in the U.S.than Mexico so the U.S dollar would depreciate.

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Morphine

A powerful opiate analgesic drug derived from opium, used to relieve severe pain.

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