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The Theory of Purchasing Power Parity Says

Question 12

Multiple Choice

The theory of purchasing power parity says:


A) The real exchange rate is always greater than one
B) A dollar should buy the same goods no matter where in the world you go
C) The dollar price of a basket of goods in the U.S.should equal the yen price of a basket of goods in Japan
D) The real exchange rate is always less than one

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