According to the Purchasing Power Parity Theory of Exchange Rates

Multiple Choice

According to the purchasing power parity theory of exchange rates,

A) a dollar, when converted to other currencies at the prevailing floating exchange rate, has the same purchasing power in various countries.
B) in equilibrium, national currencies have equal value in terms of gold.
C) the higher a nation's price level in terms of its own currency, the greater is the amount of foreign exchange it can obtain for a unit of its currency.
D) nominal currency values will tend to equalize (become 1 = 1) in the long run.