Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

Related Mcqs:

If Canada runs a balance of payments surplus and exchange rates are floating ?

A. the value of other currencies will rise relative to the dollar B. the dollar will depreciate relative to other currencies C. the price of foreign goods will become cheaper to Canadians D. the price of foreign goods will rise for Canadians...

The exchange value of the U.S dollar is primarily determined by ?

A. the rate of inflation in the United States B. the number of dollars printed by the U.S government C. the international demand and supply for dollars D. the monetary value of gold held at Fort Knox, Kentucky...

The assets market approach is most helpful in explaining ?

A. why exchange rates remain quite stable B. why governments change their money supplies C. long term exchange rate movements D. short term exchange rate movements...

Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that ?

A. the Canadian current account balance is in surplus B. the Swiss current account balance is in deficit C. the Canadian current account balance is in equilibrium D. the Swiss current account balance is in equilibrium...

If Japan runs current account deficit and exchange rates are floating?

A. Japanese exports become more expensive to foreign buyers B. Japanese exports become less expensive for foreign buyers C. Japanese imports become less expensive for German buyers D. Japanese imports become more prestigious to German buyers...