Answer:
The Constitution
Explanation:
In the United States, Article I, Section 8 of the Constitution gives Congress the power to "lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. This is also referred to as the "Taxing and Spending Clause."
Match the jobs with the career clusters
FOR PLATO EXPLORING CAREER OPTIONS POST TEST!
Health Science
Hospitality and Tourism
Human Services
List of Careers:
- Radiologist
-Sociologist
-Concierge
-Nurse Practitioner
-Meeting Planner
-Adult Care Counselor
?
Answer:
Health Science - Radiologist, Nurse Practitioner
Hospitality and Tourism - Concierge, Meeting Planner
Human Services - Sociologist, Adult Care Counselor
There are different career: Health Science: Nurse Practitioner, radiologist. Hospitality and Tourism: meeting planner, concierge. Human Services: adult care counselor and sociologist.
Various occupations connected to healthcare and medicine are included in the health science career cluster. Radiologist and Nurse Practitioner are two professions that fall within this cluster.
The hospitality and tourism career cluster covers a variety of occupations that are connected to the management, marketing, and operation of eateries, accommodation, attractions, leisure activities, and travel-related services.
The human services career cluster encompasses a variety of occupations dedicated to helping people and communities.
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When operating in a constrained environment, which products should be produced? a. products with the highest contribution margin per unit b. products with the highest contribution margin per unit of the constrained process c. products with the highest selling price d. products with the lowest allocated joint cost
Answer: B. products with the highest contribution margin per unit of the constrained process.
Explanation:
When operating in a constrained environment, the products that should be produced are the products with the highest contribution margin per unit of the constrained process.
This is essential for the company to maximize its total contribution margin. This in turn will help the company in realizing revenue and also maximizing profit.
Which of the following best explains how the rise of machinery created an unfriendly relationship between industrialists and their employees?
A. The industrialist earned his income from the work of others.
B. There was a lack of unions.
C. The employees were underpaid.
Answer:
C
Explanation:
In as much as these are the only options given, then there has to be an answer there. Even though I fancy there being another answer.
But I'd say, the closest to the reason from the aforelisted is that the employees were underpaid. Since the advent of machineries, truth is that there wasn't going to be need for employees. This is because machines tend to have a much better output, better efficiency and won't need to be paid monthly in wages.
Since there isn't need for employees again, the industrialist tend to underpay the employees because they don't see their useful in the first instance
The rise of the use of machine is on the increase. The best explanation as to how the rise of machinery created an unfriendly relationship between industrialists and their employees is the employees were underpaid.
The industrialists did treat their workers bad. They make sure to keep wages as low as ever. Their attitude towards their employee was like if employee did not like the pay, the long hours and other working conditions he could quit and go to other places.
They were super-rich, living in great homes, living life lavishly abut their employees were paid little sum as if they do not have any choice.
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Agency employees interact with Taco Bell employees across job types because they need knowledge about the products and plans, increasing their:________
a. boundary spanning.
b. hierarchical sensitivity.
c. decision informity.
d. staff validity.
e. task validity.
Answer:
c. decision informity.
Explanation:
Since in the question it is mentioned that there is a interaction of Agency employees with the employees of Taco bell for different types of job as they need the knowledge regarding the product and plans that increased the decision informity
As if you have great knowledge and information so you are able to take the right decision i.e. ultimately good for a company
Therefore the option c is correct
Howard Company has 10,000 shares of $200 par value, 6% cumulative preferred stock and 150,000 shares of $50 par value common stock. Howard declares and pays cash dividends amounting to $800,000. If no arrearage on the preferred stock exists, how much in total dividends is paid to each class of stock
Answer:
Dividend - Preferred stock = $120000
Dividend - Common stock = $680000
Explanation:
The amount of dividend that is paid to each class of stock can be calculated by first calculating the dividend payable to preferred stock. The amount of dividend on preferred stock is fixed and is paid before the common stockholders are paid. Thus, dividend on preferred stock per year is,
Dividend - Preferred stock = 10000 * 200 * 0.06 = $120000
Thus, out of $800000 cash dividends, $120000 will be paid on the cumulative preferred stock.
Remaining dividend = 800000 - 120000 = $680000
The remaining $680000 will be paid to the common stockholders.
11. Paying off a consumer loan prior to its maturity Paying Off Installment Loans Some installment loans include terms that charge a penalty if the borrower pays off the loan earlier than its maturity date. The specific terms can vary so it’s important to know if a loan you’re considering provides for a prepayment penalty and if it does, what its exact terms are. A common way to compute a penalty is the sum-of-the-digits method. You and your friend recently took out installment loans. You expect to pay off your loan before its maturity date, so you made sure that the contract: Provides for the use of the Rule of 78s Does not contain a prepayment penalty clause Provides for the use of the sum-of-the-digits method Your friend didn’t anticipate being able to pay off the loan before its maturity date—until he won a lot of money in the lottery, enough to pay it off. He decided to pay off the loan today rather than invest his winnings. What’s the most likely reason why? The loan contract would use the sum-of-the-digits method to compute interest if your friend paid off the loan before its maturity date. The interest rate on the loan is lower than the rate of return your friend would earn on his investment. The contract does not contain a prepayment penalty clause. True or False: Computing interest using the sum-of-the-digits method allocates more interest at the beginning of a loan than at the end of the loan. True or False
The amount of loss (lower profit or higher cost) from not making the best decision for each state of nature is known as:______.a. best payoff.
b. opportunity loss.
c. risk profile.
d. utility.
Answer:
b. opportunity loss.
Explanation:
The opportunity loss means the loss that arises by taking the difference between the profit i.e. optimal and the actual payoff received for a specific decision. It could occurred at the time when the best alternative is not picked up.
Therefore according to the given options, the option b is correct as it meets the criteria given in the question
Hence, all the other options are incorrect
Draw a correctly labeled loanable funds graph that shows what happens to real interest rates for each of the following situations: (You will have 3 graphs)
The government borrows money to fund a war.
Private investors become more optimistic about the economy.
The government raises personal income taxes (do not consider the change in consumer saving).
In the text box provided, enter the time and date you sent your graphs to your instructor. Please specify if you e-mailed or faxed the graph. Make sure your name and the assignment number are on your paper and that each graph is clearly marked with an a, b, or c. (30 points)
Answer:
1. a) War increases demand for loanable funds, demand curve shifts RIGHT. (Increase in real interest rate)
b) Private investors are optimistic about the economy (i.e. investment opportunities). Demand for loanable funds increases, demand curve shifts RIGHT. (Increase in real interest rate)
c) Tax increase means a decrease in the supply about loanable funds. Supply curve shifts LEFT. (Increase in real interest rate)
2. would most likely increase the supply of loanable funds. If Americans are saving more, then they are spending less money and investing more of it. Remember--saving does not mean "not using it". It means investing it instead of consuming.
3. The interest rate will fall. There is a surplus of loanable funds and the real interest rate will reflect this surplus by falling.
4. decrease in the demand for loanable funds. When output decreases, the return on investment for new projects decreases and investors are less in need of money to fund their ventures.
5. decrease the supply for loanable funds. If they are consuming more, they are saving less.
6. Increase / Decrease. When interest rates increase, growth is reduced because funding economic ventures is now more costly. Sometimes the fed will increase interest rates when it anticipates inflation to increase in order to mitigate economic growth.
Hope this was helpful!
Explanation:
The separation of the ownership of the firm from the control of the firm leads to: ____________
a. debt financing.
b. an agency problem.
c. depreciation.
d. equity financing.
Answer:
D. Equity financing
Explanation:
Hope this helps!
Carter's preferred stock pays a dividend of $1.40 per quarter. If the price of the stock is $69.00, what is its nominal (not effective) annual expected rate of return?
Answer:
Carter's preferred stock nominal annual expected rate of return is 8.12%.
Explanation:
Nominal annual expected rate of return of a preferred stock can be described as the current or unadjusted rate of return of the stock.
The nominal annual expected rate of return can be calculated as follows:
Nominal annual expected rate of return = Annual preferred stock dividend per share / Preferred stock price ............. (1)
Where;
Annual preferred stock dividend per share = Dividend per quarter * 4 = $1.40 * 4 = $5.60
Preferred stock price = $69.00
Substituting the values into equation (1), we have:
Nominal annual expected rate of return = $5.60 / $69.00 = 0.0812, or 8.12%
Therefore, Carter's preferred stock nominal annual expected rate of return is 8.12%.
Donnegan Company reported operating expenses of $325,000 for 2020. The following data were extracted from the company’s financial records: 12/31/19 12/31/20 Prepaid Expenses $ 60,000 $69,000 Accrued Expenses 210,000 255,000 Accounts Payable 300,000 350,000 On a statement of cash flows for 2020, using the direct method, cash payments for operating expenses should be:___________.
Answer:
cash payments for operating expenses should be $329,000
Explanation:
Cash Payments for operating expenses is included in the Cash Flow from Operating Activity Section of the Statement of Cash Flows when the Direct Method of preparing this statement is selected.
This is calculated as follows :
Cash Payments for operating expenses
Operating expenses $325,000
Adjustment of changes in Working Capital
Increase in Prepaid Expenses ($69,000 - $ 60,000) $9,000
Increase in Accrued Expenses ($255,000 - $210,000) $45,000
Increase in Accounts Payable ($350,000 - $300,000) ($50,000)
Cash payments for operating expenses $329,000
Question 16 of 20
Frank just met with his marketing team to create his billboard sign. So far, he
knows the billboard will have a catchy slogan, a brief description about the
company and what makes them different, and information directing
customers to visit his website. What element of an effective advertisement is
Frank's billboard missing?
A. Unique selling proposition
B. Call to action
C. Appropriate information
O D. Exciting graphics and color
Answer:
b. call to action
Explanation:
An element of an effective advertisement is Frank's billboard missing is Call to action. Thus the correct option is B.
What is advertisment?An advertisement is referred tool of promotion to create awareness of any product among customers and persuade them to make a purchase which helps in the sales of the product.
In this paragraph, it is described that Billboards have a catchy slogan that gets successful gets the attention of the customer, and influences them to make a visit to their website.
The element of effective advertising which the billboard is missing is a call to action that encourages customers to take action of buying. Here Billboards is unable to tell a story to engage customers so that they will not turn their actions of buying.
Therefore, option B is appropriate.
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A college education fund is to be accumulated by twenty level semi-annual deposits, the first due on Jan. 1, 2011. The fund is to provide sixteen quarterly withdrawals of $1000 each, the first due on Oct 1, 2020. The nominal annual rate of interest is 10% convertible semi-annually. What is the amount of each deposit?
Answer:
$395.74
Explanation:
the college fund requires 20 equal semiannual payments starting January 1, 2011 and the last one should be made on July 1, 2020.
first we must determine the effective rate of the fund:
effective rate = (1 + 10%/2)² - 1 = 10.25%
now we must determine the quarterly rate:
quarterly rate = (1 + r)¹/⁴ - 1 = 2.47%
the present value of the annuity:
PV = distribution x annuity factor
distribution = $1,000PV annuity factor, 2.47%, 16 periods = 13.08553PV = $1,000 x 13.08553 = $13,085.53
that means that by July 1, 2020, you need to have $13,085.53 in your college fund
FV of an annuity = contribution x annuity factor
FV = $13,085.53FV annuity factor, 5%, 20 periods = 33.066contribution = FV / annuity factor = $13,085.53 / 33.066 = $395.74
Suppose apples come in two quality levels, low and high. At a store in the apple-growing region, the price of low-quality apples is $1 per pound, and the price of high-quality apples is $4 per pound. Johnny lives in the apple-growing region and buys eight pounds of each type. His marginal utility of apples is 3 utils for low-quality apples and 12 utils for high-quality apples.
a. Is Johnny maximizing his utility?
b. Suppose Johnny moves to an area outside the apple-growing region. Shipping the apples to his new area adds $2 to the price of a pound of apples, for both low- and high-quality apples. To simplify matters, assume Johnny's income increases by an amount large enough to fully offset the higher prices of apples. In other words, he can still afford the original bundle of eight pounds of each type of apples. If he continues to buy eight pounds of apples of each type, is he maximizing his utility? If not, how should he change his mix of high- and low-quality apples?
c. What are the implications for the mix of high- and low-quality apples in apple-growing areas and other regions? Where will most of the high-quality apples be sold?
Answer:
a. Is Johnny maximizing his utility?
in order to determine if Johnny is maximizing his utility we must calculate the utils per dollar spent on apples:
low = 3 / $1 = 3 utils per $high = 12 / $4 = 3 utils per $since both types of apples yield the same utility per dollar spent, then Johnny is maximizing his utility.
b. Suppose Johnny moves to an area outside the apple-growing region. Shipping the apples to his new area adds $2 to the price of a pound of apples, for both low- and high-quality apples. To simplify matters, assume Johnny's income increases by an amount large enough to fully offset the higher prices of apples. In other words, he can still afford the original bundle of eight pounds of each type of apples. If he continues to buy eight pounds of apples of each type, is he maximizing his utility? If not, how should he change his mix of high- and low-quality apples?
low = 3 / $3 = 1 util per $high = 12 / $6 = 2 utils per $Johnny is no longer maximizing his utility since he should buy less-low quality apples and more high-quality apples
c. What are the implications for the mix of high- and low-quality apples in apple-growing areas and other regions? Where will most of the high-quality apples be sold?
Since distribution costs increase the price of apples equally regardless of their quality, low-quality apples will be consumer more in the areas surrounding apple-growing fields. On the other hand, high-quality apples will be sold in larger amounts in areas far away from apple-growing fields. Distribution costs are based on weight and volume, not quality. That is why it is more profitable to sell high-quality goods far away.
In a monopolistically competitive industry, price:______
a. is most likely a bit higher than the competitive market price because of the cost of variety.
b. will exceed the monopoly price due to the destructiveness of competitive forces.
c. will be lower than the competitive price due to cost savings.
d. is contingent on the behavior of other firms because they are mutually interdependent.
Answer:
a
Explanation:
In a monopolistically competitive industry, price is most likely a bit higher than the competitive market price because of the cost of variety.
In a monopolistically competitive market, firms tend to set their prices to be higher than those of the marginal cost. This invariably translates to the fact that market is never really able to be productively efficient.
Firms in monopolistically competitive markets tend to wield the same power, since they're all price makers, they have a low degree of market power.
An increase in a firm's tax rate will__________ if the firm has debt capital in its capital structure:
a. increase both the cost of preferred stock and debt.
b. decrease the cost of preferred stock.
c. increase the firm's WACC.
d. decrease the firm's WACC.
Answer:
d. decrease the firm's WACC.
Explanation:
As per WACC formula
WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )
By assuming the values to prove the answer
Weights
Common equity = 55%
Preferred Equity = 15%
Debt = 30%
Costs
Common equity = 15%
Preferred Equity = 8%
Debt = 12%
Tax rate is 15%
Placing values in the formula
WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )
WACC = 8.25% + 3.06% + 1.2% = 12.51%
Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula
WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )
WACC = 8.25% + 2.7 + 1.2% = 12.15%
Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.
In a single period system, the target ________ is the balancing point between shortage costs and excess costs.
Answer: service level
Explanation:
A single period inventory model typically occurs to the organizations that order one-time items. In this case, such organizations can only get the right quantity when they order once in order to prevent loss.
In a single period system, the target service level is the balancing point between shortage costs and excess costs.
Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%
Answer:
the real rate of return is 2.88%
Explanation:
The computation of the real rate of return is shown below:
As we know that
Real rate of return is
= {(1 + nominal rate of return) ÷ (1 - inflation rate)} - 1
= {(1 + 0.07) ÷ (1 + 0.04)} - 1
= 2.88%
Hence, the real rate of return is 2.88%
We simply applied the above formula so that the correct value could come
And, the same is to be considered
The combination of debt financing and equity financing that maximizes a firm's value is known as its:
Answer:
optimal capital structure
Explanation:
optimal capital structure can be regarded as a combination of
of debt and equity financing which brings about maximization of amarket value in a firm. It should be noted that optimal capital structure is the combination of debt financing and equity financing that maximizes a firm's value.
At an output level of 17,500 units, you have calculated that the degree of operating leverage is 3.26. The operating cash flow is $78,000 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for 18,500 units and 16,500 units? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) DOL at 18,500 units DOL at 16,500 units
Answer:
DOL at 18,500 = 2.91 DOL at 16,500 = 3.78Explanation:
First find out the Contribution margin per unit and the fixed costs to enable you calculate the profit for the 18,500 units and the 16,500 units.
DOL = Contribution Margin/ Profit
3.26 = Contribution Margin/ 78,000
Contribution Margin = 3.26 * 78,000
= $254,280
Per unit = 254,280/17,500 = $14.53
Fixed Costs = Contribution - Profit
= 254,280 - 78,000
= $176,280
DOL at 18,500 units.
Profit = (14.53 * 18,500) - fixed costs of $176,280
= $92,525
DOL = Contribution/ Profit
= (14.53 * 18,500) / 92,525
= 2.91
DOL at 16,500 units.
Profit = (14.53 * 16,500) - 176,280
= $63,465
DOL = (14.53 * 16,500) / 63,465
= 3.78
pencer Co. has a $300 petty cash fund. At the end of the first month the accumulated receipts represent 553 for delivery expenses, $167 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $58. The journal entry to record the reimbursement of the account includes a:_________.a) Debit to Petty Cash for $300. b) Debit to Cash Over and Short for $58 c) Credit to Cash for $242 d) Credit to Inventory for $167e) Credit to Cash Over and Short for $58.
Answer:
c) Credit to Cash for $242
Explanation:
Petty cash, beginning = $300
Delivery expense = $53
Merchandise inventory = $167
Miscellaneous expense = $22
Petty cash, Ending = $58
The journal to record the reimbursement of the accounts will be:
Event Account Title and Explanation Debit Credit
1 Delivery expense $53
Merchandise inventory $167
Miscellaneous expense $22
Cash $242
ABC company had 8,000 in accounts receivable on Dec. 31, 2019. However, the company estimated that 2,000 of them would become bad debt. The company recorded the 2,000 as bad debt. What is the impact on the financial statement?
Answer:
Net income is reduced by 2,000 and the net value of receivables on balance sheet reduced by 2,000
Explanation:
Since it is given that there is $8,000 in account receivable out of which $2,000 would be estimated and recorded as a bad debt
So here the bad debt expense is recorded that means the expenses are increased that ultimately reduced the net income also at the same time the amount of receivable would also decreased by $2,000
Therefore the same is to be considered
Which of the following describes the purpose of the Federal Deposit
Insurance Corporation (FDIC)?
O A. To manage the economy by controlling the money supply.
B. To set the required reserve ratio for banks in the United States.
C. To prevent the demand for withdrawals from rising above 10
percent
D. To make sure customers don't lose money if their bank fails.
Answer:
D. To make sure customers don't lose money if their bank fails.
Explanation:
The Federal Deposit Insurance Corporation, or simply the FDIC, is an independent agency whose mandate ensures customers do not lose their deposits should a bank or any other financial institution fails. The FDIC insures customer deposits up to a stated limit per person, per bank, per each account category. The insurance coverage is automatic to all account holders in an FDIC insured bank.
The Federal Deposit Insurance Corporation is financed by the insurance premiums paid by banks and other institutions. The FDIC’s scope covers checking accounts and savings such as money market accounts and certificates of deposit (CDs).
D is the answer!
source : ay p ex
If the European subsidiary of a U.S. firm has net exposed assets of 750,000 Euros, and the euro drops in value from $1.30/euro to $1.20/ Euro the U.S. firm has a translation:__________
a. gain of $75,000
b. loss of $75,000
c. gain of $65,000
d. loss of 546,923
A portfolio has 70 shares of Stock A that sell for $30 per share and 125 shares of Stock B that sell for $17 per share. (a) What is the portfolio weight of Stock A?(b) What is the portfolio weight of Stock B?
Answer:
Portfolio weight of Stock A=49.70%
Portfolio weight of Stock A=50.29%
Explanation:
Calculation for the portfolio weight of Stock A and Stock B
First step is to calculate the total amount invested in both portfolio weight of Stock A and Stock B
Stock A and Stock B Total amount invested=
(A 70 shares*$30 per share)+ (B 125 shares*$17 per share)
Stock A and Stock B Total amount invested=$2,100+$2,125
Stock A and Stock B Total amount invested=$4,225
Now let calculate the PORTFOLIO WEIGHT OF STOCK A
Using this formula
Portfolio weight of Stock A=Stock A/Stock A and Stock B Total amount invested
Let plug in the formula
Portfolio weight of Stock A=(70 shares*$30 per share)/$4,225
Portfolio weight of Stock A=$2,100/$4,225
Portfolio weight of Stock A=0.4970*100
Portfolio weight of Stock A=49.70%
Therefore the Portfolio weight of Stock A
will be 49.70%
Calculation for PORTFOLIO WEIGHT OF STOCK B
Using this formula
Portfolio weight of Stock B=Stock B/Stock A and Stock B Total amount invested
Let plug in the formula
Portfolio weight of Stock B=(125 shares*$17 per share)/$4,225
Portfolio weight of Stock B=$2,125/$4,225
Portfolio weight of Stock B=0.5029*100
Portfolio weight of Stock B=50.29%
Therefore the Portfolio weight of Stock will be 50.29%
Harrold is the project manager for his organization and he has seven people on his project team. Who is responsible for executing the project plan and creating the project deliverables?A. Project lead.B. Project manager and the project team.C. Project manager.
D. Project team.
Answer: D. Project team
Explanation:
The project team is responsible for executing the project plan and creating the project deliverables. They are also in charge of contributing to the success of the project by making sure that the project objectives are achieved.
Each team mate has a specific role that he or she is assigned and the team should execute the tasks assigned to them successfully.
Why would an e-mail rule memo like this work better as an innovation-driven company such as Tesla rather than at a manufacturing-driven company such as General Motors
Answer:
An e-mail rule memo like this work better as an innovation-driven company such as Tesla rather than at a manufacturing-driven company such as General Motors is discussed below in details.
Explanation:
The general motor is a very large business in each department with numerous tiers of hierarchy. then departments of the hierarchy are likely to report each other. the company's overall structure is very bureaucratized. one of the disadvantages is that when it comes to decision making and policymaking. General Motors are a slow-moving business. However, this bureaucracy is required by the big organizational structure to keep it together.
Tesla is a business that is younger and relatively lower than General motors because of this general motor funds are likely to be lacking but they are agile and that is their benefit.
An e-mail rule is a rule that determines the better way to mail the messages formally or informally. Tesla is a business that is younger and relatively lower than General motors because of this general motor funds are likely to be lacking but they are agile and that is their benefit.
The reason e-mail rule memo works better as compared to innovation-driven is:
The general motor holds a very large economic activity in each department with numerous tiers of hierarchy and then these departments of the hierarchy are likely to report each other, the company's overall structure is very bureaucratized. One of the disadvantages of this is that when it comes to decision making and policymaking. General Motors are a slow-moving business. However, this bureaucracy is required by the big organizational structure to keep it together.
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Van Hookie, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from the date of issue. If the bonds were issued at a premium, this indicates that:________
a. the effective yield or market rate of interest exceeded the stated (nominal) rate.
b. the stated rate of interest exceeded the market rate.
c. the market and stated rates coincided.
d. no necessary relationship exists between the two rates
Answer:
c
Explanation:
You use ________________ to communicate a risk and the resulting impact.A. risk management plansB. CBAsC. risk statementsD. POAMs
Answer:A
Explanation:
Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will:
Answer:
Appreciate more
Explanation:
Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will appreciate more. This is because the shift in demand and supply will cause an increase in the value of the dollar. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.