If Over the Next Few Years Inflation Is Higher in Mexico

question 12

Multiple Choice

If over the next few years inflation is higher in Mexico than in the U.S. ,then according to purchasing-power parity which of the following should rise?

• A)the U.S.real exchange rate but not the U.S.nominal exchange rate
• B)the U.S.nominal exchange rate but not the U.S.real exchange rate
• C)the U.S.real exchange rate but not the U.S.nominal exchange rate.
• D)neither the U.S.real nor the U.S.nominal exchange rate.

---

Definitions:

Alternative Hypothesis

The hypothesis that proposes there is a significant difference between two variables or that a parameter of the population has a value that contradicts the null hypothesis.

Simple Linear Regression

A statistical method for modeling the relationship between a dependent variable and one independent variable.

F Statistic

A ratio of variances that is used primarily in ANOVA to assess whether the variances between groups are significantly different.

Alternative Hypothesis

The hypothesis that proposes a significant difference, relationship, or effect, and is accepted if the null hypothesis is rejected.