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If Inflation in New Zealand Suddenly Increased While Euro Area

Question 3

Multiple Choice

If inflation in New Zealand suddenly increased while euro area inflation stayed the same, there would be:


A) an inward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$.
B) an outward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$.
C) an outward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$.
D) an inward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$.

Correct Answer:

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