Assume That the U

question 34

Multiple Choice

Assume that the U.S. inflation rate is higher than the New Zealand inflation rate. This will cause U.S. consumers to ____ their imports from New Zealand and New Zealand consumers to ____ their imports from the U.S. According to purchasing power parity (PPP) , this will result in a(n) ____ of the New Zealand dollar (NZ$) .

• A) reduce; increase; appreciation
• B) increase; reduce; appreciation
• C) reduce; increase; depreciation
• D) reduce; increase; appreciation.