Multiple Choice
The purchasing power parity theory of exchange rate determination states that
A) in the short run, rates will adjust to parity.
B) in the long run, the rate reflects differences in price levels between the two countries.
C) in the long run, a government agency sets the rate at parity.
D) in the short run, the cost of labor really sets the exchange rate.
Correct Answer:
Verified
Correct Answer:
Verified
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