If the Purchasing Power Parity Theory Were Literally True

question 45

Multiple Choice

If the purchasing power parity theory were literally true

• A)we should see some nations devaluing their currencies relative to the U.S.dollar while other nations revalue their currencies
• B)the price of a traded good should be the same everywhere in the world
• C)the price of a Big Mac should be the same everywhere in the world
• D)the exchange rate should be the same everywhere in the world
• E)prices should tend toward equality with exchange rates