Asked by Logan Robinson on Jul 11, 2024
Verified
Assuming purchasing-power parity holds and that over a period of five years the dollar had appreciated relative to the currency of Country X, what would explain the appreciation of the dollar?
Purchasing-Power Parity
An economic theory that compares different countries' currencies through a "basket of goods" approach to determine exchange rates.
Dollar Appreciated
A situation where the value of the US dollar increases relative to other currencies, making foreign goods and services cheaper for Americans.
- Examine the effects of currency appreciation and depreciation on global trade and investment dynamics.
- Gain an understanding of purchasing-power parity and its influence on international price comparisons.
Verified Answer
DP
Daksh PatelJul 13, 2024
Final Answer :
Money growth, and so inflation, was higher in Country X than in the U.S.
Learning Objectives
- Examine the effects of currency appreciation and depreciation on global trade and investment dynamics.
- Gain an understanding of purchasing-power parity and its influence on international price comparisons.