The Reason for the Slow Adjustment of the Real Exchange

question 16

Multiple Choice

The reason for the slow adjustment of the real exchange rate toward purchasing power parity is that

• A)there are always transportation costs involved in the movement of goods across borders
• B)governments may have imposed tariffs on foreign goods
• C)certain goods cannot be traded
• D)people in different countries do not necessarily consume the same market basket of goods
• E)all of the above

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