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Question
The purchasing power parity for different countries is adjusted (up or down) depending upon whether a country's cost of living is lower or higher than the cost of living in the United States.Answer
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To express the PPP theory in symbols, let P$ be the U.S. dollar price of a basket of particular goods and P be the price of the same basket of goods in Japanese yen. What does the purchasing power parity (PPP) theory predict to be the equivalent of the dollar/yen exchange rate, E$/?
A.E$/ = (1 + P)/P$
B.E$/ = (1 + P$)/P
C.E$/ = P/P$
D.E$/ = P$/P
E.E$/ = (1 + P$)/(1 + P)
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What is meant by translation exposure?
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Which of the following observations is true of technical analysis, an approach to exchange rate forecasting?
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What kind of demand is seen when a small change in price produces a large change in demand?
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In which of the following conditions does arbitrage occur?
A.When a firm offers a product at low prices through discount coupons and promotions
B.When a firm sells a product at higher prices to make a profit from relatively fewer sales
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D.When a firm purchases products in a country where prices are lower and resells them in a country where prices are higher
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Which of the following is true of the barriers to international communication?
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C.Many international businesses try to promote positive source effects by deemphasizing their foreign origins.
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According to research, when do consumers usually use the country of origin as a cue when evaluating a product?
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E.When a firm resorts to personal selling instead of mass media advertising