Which one of the following statements is the MOST accurate?
A) The purchasing power of any given country's currency will increase in countries where the prices of non-tradable goods rise.
B) The purchasing power of any given country's currency will fall in countries where the prices of non-tradable goods fall.
C) The purchasing power of any given country's currency will fall in countries where the prices of non-tradable goods rise.
D) The purchasing power of any given country's currency will remain constant in countries where the prices of non-tradable goods rise.
E) The purchasing power of any given country's currency will fall in countries where the prices of non-tradable goods remain constant.

Question

Quizplus · Accepted Answer

Non-tradable goods are goods that are only available domestically and cannot be imported or exported. When the prices of non-tradable goods rise, the cost of living in that country increases, which can lead to higher inflation. This results in a decrease in the purchasing power of that country's currency, as it will now require more units of that currency to purchase the same amount of goods and services. Therefore, option C is the most accurate statement.

Which One of the Following Statements Is the MOST Accurate