The Purchasing Power Parity Theory Is a Good Predictor of

Multiple Choice

The purchasing power parity theory is a good predictor of

A) all of the following
B) the long-run tendencies between changes in the price level and the exchange rate of two countries
C) interest rate differentials between two countries when there are strong barriers preventing trade between the two countries
D) how intervention in exchange markets by central banks influences prices in various countries
E) the day-to-day relationship between changes in the price level and the exchange rate of two countries