If US Inflation Suddenly Increased While European Inflation Stayed the Same

question 35

Multiple Choice

If U.S. inflation suddenly increased while European inflation stayed the same, there would be:

• A) an increased U.S. demand for euros and an increased supply of euros for sale.
• B) a decreased U.S. demand for euros and an increased supply of euros for sale.
• C) a decreased U.S. demand for euros and a decreased supply of euros for sale.
• D) an increased U.S. demand for euros and a decreased supply of euros for sale.

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Definitions:

Investment

Allocation of resources, usually money, with the expectation of generating an income or profit.

Income Tax Overpayment

A situation where an individual or entity has paid more income tax to the government than was actually owed.

Canada Revenue Agency

The federal agency responsible for administering tax laws and various social and economic benefit and incentive programs delivered through the tax system for the Government of Canada.

Simple Interest

A method of calculating interest where the charge is based on the original principal amount and does not compound.