If the USprice Level Is Increasing by 3 Percent Annually and the and the Japanese

question 77

Multiple Choice

If the U.S.price level is increasing by 3 percent annually and the Japanese price level is increasing by 1 percent annually,then according to purchasing-power parity,by about what percent would the nominal exchange rate be changing?

• A)decreasing by 4 percent
• B)decreasing by 2 percent
• C)increasing by 4 percent
• D)increasing by 2 percent

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