Traders Take Advantage of Deviations from Purchasing Power Parity by Buying

question 65

Multiple Choice

Traders take advantage of deviations from purchasing power parity by buying cheap goods and selling expensive ones.This trading causes the price of goods to ________ and exchange rates to ________.

• A) fall; fall
• B) rise; rise
• C) fall; rise
• D) rise; fall

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Definitions:

Multiple Regression Equation

A statistical technique that models the relationship between a dependent variable and two or more independent variables by fitting a linear equation to observed data.

Regression Coefficients

Regression coefficients are values that quantify the relationship between each independent variable and the dependent variable in a regression model.

Y-intercept

The point where the graph of a function or relation intersects the y-axis of the coordinate system.

Regression

A statistical method that analyzes the relationship between a dependent variable and one or more independent variables.