Multiple Choice
If the PPP is satisfied then:
A) the nominal exchange rate stays constant over time.
B) the nominal exchange rate may depreciate or appreciate over time but the rate of this depreciation/appreciation stays constant.
C) SP*/P = 1, where S = nominal exchange rate, P* = foreign country price level, P = home country price level.
D) SP*/P = constant (not necessary 1) , where S = nominal exchange rate, P* = foreign country price level, P = home country price level.
Correct Answer:
Verified
Correct Answer:
Verified
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