Assume That the New Zealand Inflation Rate Is Higher Than

question 62

Multiple Choice

Assume that the New Zealand inflation rate is higher than the U.S. 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; depreciation
• C) reduce; increase; depreciation.
• D) reduce; increase; appreciation

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