The Theory of Relative Purchasing Power Parity

question 6

Multiple Choice

The theory of relative purchasing power parity

• A) can be used to explain differences in real interest rates among countries.
• B) holds extremely well in the short run.
• C) does not hold well in the long run.
• D) is used to explain the difference between U.S. and foreign treasury security yields.
• E) seeks to explain changes in purchasing power parity over time.

---

Definitions:

Contract Termination

The legally sanctioned end of a contract's validity, which can occur due to fulfillment, mutual agreement, or breach by one of the parties.

Obligations Performance

The fulfillment or execution of the duties, actions, or tasks that are required by a contract, agreement, or legal requirement.

Oral Agreement

A contract or agreement made through spoken communication rather than written, legally binding if it meets certain criteria.

Contract Discharge

The termination of a contract's obligations, which can occur through various means such as performance, agreement, or breach.