Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 34P: The total price of purchasing a basket of goods in the United Kingdom over four years is: year...
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Question
The following represents the inflation rates of foreign country X for the past 5 years:
Year 1: 35%
Year 2: 20%
Year 3: 25%
Year 4: 30%
Year 5: 15%
Which statement is correct about the selection of a functional currency for country X at the end of year 5.
a. |
Country X is highly inflationary; the US dollar must be used
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|
b. |
Country X is highly inflationary; the foreign currency must be used
|
|
c. |
Country X is not highly inflationary; the US dollar must be used
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d. |
Country X is not highly inflationary; either the US dollar or the foreign currency may be used depending on the factors to determine the functional currency
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e. |
Country X is not highly inflationary; the foreign currency must be used
|
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