According to the Theory of Purchasing Power Parity (PPP),the Exchange

question 122

Multiple Choice

According to the theory of purchasing power parity (PPP) ,the exchange rate between two country's currencies is determined by

• A)relative price levels in the two countries.
• B)absolute price levels in the two countries.
• C)relative quantities of gold and official reserves held by the central banks of two countries.
• D)quantities of goods and services produced in the two countries.
• E)quantities of goods and services traded in the two countries.

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