Which of the Following Is Not True Regarding Limitations of PPP

question 12

Multiple Choice

Which of the following is not true regarding limitations of PPP and the IFE?

• A) A limitation of the IFE is that the determination of the expected inflation rate is subject to error.
• B) A limitation in testing PPP is that the results will vary with the base period used.
• C) A limitation of the PPP and the IFE (because it relies on the PPP) is that other country characteristics besides inflation can affect exchange rate movements.
• D) All of these are true.

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The unequal distribution of wealth and resources among different groups or individuals within a society.

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