If Purchasing-Power Parity Holds but Then U

question 14

Multiple Choice

If purchasing-power parity holds but then U.S.prices rise,which of the following move the exchange rate back towards purchasing-power parity?

• A)foreign prices rise or the U.S.nominal exchange rate rises
• B)foreign prices rise or the U.S.nominal exchange rate falls
• C)foreign prices fall or the U.S.nominal exchange rate rises
• D)foreign prices fall or the U.S.nominal exchange rate falls

---

Definitions:

Supplies Used

The value of materials and goods consumed during a company's operations within a specific period.

Book Value

The net value of an asset as recorded on the balance sheet, calculated by subtracting its accumulated depreciation from its original cost.

Fair Value

An estimate of the market value of an asset or liability based on current conditions and willing buyer and seller dynamics, often used for financial reporting purposes.

Salary Allowance

This term refers to a fixed amount or stipend that is given in addition to salary, often for the purpose of covering specific expenses.