The PPP Theory Says That in the Long Run the Exchange

question 129

Multiple Choice

The PPP theory says that in the long run the exchange rate between two currencies should move toward __________ the cost in each country of an identical basket of internationally traded goods.

• A)equalizing
• B)minimizing
• C)maximizing
• D)reducing to zero
• E)disequilibrating

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Definitions:

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to the interconnectedness of the world economy.

Socioeconomic Equality

The condition in which access to wealth, opportunities, and resources within a society is distributed evenly across all social and economic groups.

Emerging Markets

Countries with developing economies that are experiencing rapid industrialization and growth, offering significant opportunities for investment but also posing greater risks.

Industrial Product

Goods or services produced for the business sector to facilitate production processes or operations.