The Theory of Purchasing Power Parity Cannot Fully Explain Exchange

question 90

Multiple Choice

The theory of purchasing power parity cannot fully explain exchange rate movements because

• A) all goods are identical even if produced in different countries.
• B) monetary policy differs across countries.
• C) some goods are not traded between countries.
• D) fiscal policy differs across countries.

---

Definitions:

Horn

A device that emits a loud sound for signaling or warning purposes.

LED Status Indicator

A light-emitting diode used to display the operational state or condition of a device or system.

Proximity Switches

Sensors that detect the presence or proximity of an object without physical contact, commonly used in industrial control applications.

Sensing Range

The maximum and minimum distances within which a sensor can accurately detect an object.