According to Purchasing Power Parity, the Relationship Among the Domestic

question 63

Multiple Choice

According to purchasing power parity, the relationship among the domestic price (P) , the foreign price
(P*) , and the nominal exchange rate (e) , can be written as

• A) P = e - P*.
• B) P = P* - e.
• C) P = eP*.
• D) P = e/P*.
• E) e = P/P*.