Multiple Choice
Which of the following provides an explanation for why the theory of purchasing power parity is a poor predictor of actual exchange rates?
1) differences in the structure of the different price indices in different countries
2) the presence of nontraded goods
3) changes in the relative prices of traded goods
A) 1 only
B) 2 only
C) 3 only
D) 2 and 3
E) 1,2,and 3
Correct Answer:
Verified
Correct Answer:
Verified
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