The Theory of PPP Suggests That If One Country's Price

question 91

Multiple Choice

The theory of PPP suggests that if one country's price level falls relative to another's,its currency should

• A)depreciate.
• B)appreciate.
• C)float.
• D)do none of the above.

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Definitions:

Market-Based Policies

Economic strategies that utilize market principles and forces to address and solve problems, often with the goal of improving efficiency and outcomes.

Environmental Protection Agency

A U.S. federal agency established to coordinate and enforce national pollution control laws and regulations to protect human health and the environment.

Pollution Permits

Allowances given to companies that permit them to emit a certain amount of pollutants; can be bought, sold, or traded.

External Benefit

Positive effects of a transaction or activity on third parties not directly involved in the transaction, which are not reflected in the market price.