The CPI (with 2000 as the base year) for Country A was reported at 112 in 2005 and 118 in 2006. Calculate the approximate annual inflation rate for this country.

a.5.36

b.-5.36

c.4.5

d.-5.13

e.4.58

Suppose in 1915, Mexico fixed its currency at 280pesos per ounce of gold while Canada fixed its currency to C$25 per ounce of gold. As a result of the gold-currency convertibility in both countries, the peso/C$ exchange rate will be:

a.8.90pesos/C$.

b.0.75pesos/C$.

c.12.20 pesos/C$.

d.11.20pesos/C$.

e.10.02pesos/C$.

The development of increased trade imbalances and country indebtedness, together with subsequent competitive currency devaluations aiming to strengthen a country's own exports have resulted in:

a.Increased stock prices in Japan

b.The implementation of the gold standard being in most countries of the world

c.More volatility in currency exchange rates

d.All of the above

e. None of the above