One Important View of the Determination of the Foreign Exchange

Multiple Choice

One important view of the determination of the foreign exchange value of a currency is given in the purchasing power parity theory.The theory states,in effect,that:

A) any national currency should have equal buying power, given current exchange rates.
B) although prices in one country may rise faster than in another, parity is maintained.
C) lower prices in one country are offset by a depreciation of the currency in another country.
D) all of the given answers are correct.