Ask Question
BusinessBusiness
24 August, 23:40

According to the Purchasing Power Parity, if one country's price level rises relative to another's by a certain percentage, then the other country's currency appreciates by the same percentage. maintains its value. depreciates by the same percentage. lose its value.

+3
Answers (1)
  1. 25 August, 03:24
    0
    The correct answer is: appreciates by the same percentage.

    Explanation:

    According to the purchasing power parity theory, the value of the currency of the two countries is compared on the basis of a basket of goods. If the basket of goods costs the same in both the countries then the currencies are said to be in equilibrium or at par.

    If the price level increase in a country, it means that the basket of goods became expensive in that country by the same percentage as an increase in the price level.

    So the value of the currency of the other country will appreciate the same percentage as the price rise.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “According to the Purchasing Power Parity, if one country's price level rises relative to another's by a certain percentage, then the other ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Notifies the materials manager to send materials to a production department. 2. Holds indirect costs until assigned to production. 3. Hold production costs until products are transferred from production to finished goods (or another department). 4.
Answers (1)
Government bonds can vary in denomination but most corporate bonds are issued in
Answers (1)
For what reason do you think fitzgerald interrupted gatsby's story for the visit from the horseback riders? why doesn't gatsby understand that he isn't really welcome?
Answers (1)
You are considering two mutually exclusive projects. Both projects have an initial cost of $52,000. Project A produces cash inflows of $25,300, $37100, and $22,000 for years 1 through 3, respectively.
Answers (1)
Kasey corp. has a bond outstanding with a coupon rate of 5.8 percent and semiannual payments. the bond has a yield to maturity of 4.3 percent, a par value of $1,000, and matures in 24 years. what is the quoted price of the bond?
Answers (1)
New Questions in Business
After Sunshine Systems merged with RTD Enterprises, company executives noticed that due to increased employee collaboration between the two units, costs were down and revenues increased within both areas.
Answers (1)
When the consumer price index rises, the typical family a. has to spend more dollars to maintain the same standard of living. b. can spend fewer dollars to maintain the same standard of living. c. finds that its standard of living is not affected. d.
Answers (1)
A magazine subscription costs $45 per year at the beginning of each year, or $115 now for a three-year subscription. If the subscriber elects to pay the $115 now, the rate of return on the investment will be nearest to:
Answers (2)
The second step in rational decision making is to: choose the solution that maximizes value. identify the criteria that are important in making the decision. evaluate the alternatives. implement the alternative.
Answers (1)
What impact will a spike in wages cause to the labor demand curve?
Answers (1)
Home » Business » According to the Purchasing Power Parity, if one country's price level rises relative to another's by a certain percentage, then the other country's currency appreciates by the same percentage. maintains its value. depreciates by the same percentage.
Sign Up Forgot Password?