heory of purchasing-power parity says that higher inflation in a nation causes the nation’s currency to ______, leaving the

Question

dalvyx [7]

3 years ago

7

heory of purchasing-power parity says that higher inflation in a nation causes the nation’s currency to ______, leaving the

______ exchange rate unchanged. appreciate, nominal appreciate, real depreciate, nominal

Social Studies

2 answers:

hram777 [196] · Answer 1 · 2022-07-09T18:05:51+03:00

hram777 [196]3 years ago

3 0

Answer:

real depreciate , nominal appreciate

Explanation:

gulaghasi [49] · Answer 2 · 2022-07-09T19:19:41+03:00

Correct question:

The theory of purchasing-power parity says that higher inflation in a nation causes the nation's currency to ________, leaving the ________ exchange rate unchanged.

appreciate, nominal

appreciate, real

depreciate, nominal

depreciate, real

Answer:

Depreciate, real.

Explanation:

The theory of purchasing power parity says that the nominal exchange rate equals the ratio of the foreign price level (measured in units of the foreign currency) to the domestic price level (measured in units of the domestic currency): e=P*/P . As the domestic price level increases (due to higher inflation), e decreases. This depreciation of the currency, however, does not affect the real exchange rate

heory of purchasing-power parity says that higher inflation in a nation causes the nation’s currency to ________, leaving the __

heory of purchasing-power parity says that higher inflation in a nation causes the nation’s currency to ______, leaving the