If Purchasing-Power Parity Between France and the U

question 44

Multiple Choice

If purchasing-power parity between France and the U.S.holds,but then U.S.prices rise,

• A)the real exchange rate is above its purchasing-power parity value.An increase in the nominal exchange rate can move it back.
• B)the real exchange rate is above its purchasing-power parity value.A decrease in the nominal exchange rate can move it back.
• C)the real exchange rate is below its purchasing-power parity value.An increase in the nominal exchange rate can move it back.
• D)the real exchange rate is below its purchasing-power parity value.A decrease in the nominal exchange rate can move it back.

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Definitions:

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A strong feeling of wanting to have something or wishing for something to happen.

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The process by which people process and interpret information about others and themselves in a social context.

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