Choose the answer frpm the highlighted below: 1a.Regarding purchasing power pari
ID: 1200677 • Letter: C
Question
Choose the answer frpm the highlighted below:
1a.Regarding purchasing power parity (PPP) concepts,
if absolute PPP is true then relative PPP must also be true.
if absolute PPP is true then relative PPP may or may not be true.
if relative PPP is true then absolute PPP must also be true.
if absolute PPP is true then relative PPP may or may not be true, and if relative PPP is true then absolute PPP may or may not be true,
if relative PPP is true then absolute PPP must not be true.
1b
One implication of Bela Belassa’s theory is a lot of poorer countries
are stuck in poverty simply because there is an elastic demand for their products which keeps their wage rates low.
are stuck in poverty simply because there is an inelastic demand for their products which keeps their wage rates low.
are stuck in poverty simply because their workers are being exploited.
may be somewhat weathier than would be indicated by simply comparing their GDP per capita to that of developed countries.
may be somewhat poorer than would be indicated by simply comparing their GDP per capita to that of developed countries.
1c
All else equal, a country with
consistently lower inflation than another country will see its currency depreciating against the currency of the other country
consistently higher inflation than another country will see its currency appreciating against the currency of the other country
consistently higher inflation than another country will have a lower interest rate than the interest rate of the other country.
consistently lower inflation than another country will see its interest rate increasing against that of the other country
consistently lower inflation than another country will see its currency appreciating against the currency of the other country
.
Explanation / Answer
1a Regarding purchasing power parity (PPP) concepts,
if absolute PPP is true then relative PPP must also be true
1b
may be somewhat weathier than would be indicated by simply comparing their GDP per capita to that of developed countries
1cAll else equal, a country with consistently lower inflation than another country will see its currency appreciating against the currency of the other country