Multiple Choice
Which of the following is not true regarding limitations of PPP and the IFE?
A) A limitation of the IFE is that the determination of the expected inflation rate is subject to error.
B) A limitation in testing PPP is that the results will vary with the base period used.
C) A limitation of the PPP and the IFE (because it relies on the PPP) is that other country characteristics besides inflation can affect exchange rate movements.
D) All of these are true.
Correct Answer:
Verified
Correct Answer:
Verified
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