Evidence on the Existence of Relative PPP Shows That

Multiple Choice

Evidence on the existence of relative PPP shows that:

A) the evidence for relative PPP is scanty and the theory is largely discredited.
B) the evidence for relative PPP is hit or miss, and so one should exercise caution in using relative PPP to predict changes in a nation's exchange rates.
C) relative PPP is an approximate guide to predicting the relationship between changes in inflation and exchange rates over long periods, such as decades.
D) both absolute and relative PPP hold nearly perfectly in the short and long run, and are used with great accuracy to make predictions.