The Inflation Rate in the U

question 28

Multiple Choice

The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 10%. The current exchange rate for the Japanese yen (¥) is $0.0075. After supply and demand for the Japanese yen has adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be:

• A) $0.0076.
• B) $0.0073.
• C) $0.0070.
• D) $0.0066.

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Definitions:

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