One Reason for the Failure of Purchasing Power Parity Theory

question 93

Multiple Choice

One reason for the failure of purchasing power parity theory and international Fisher effect in predicting short-term movements in exchange rates is due to the

• A) impact of investor psychology on short-run exchange rate movements.
• B) strong relationship between inflation rates and interest rates.
• C) impact of interest rates and short-term exchange rate movements.
• D) strong relationship between interest rate differentials and subsequent changes in spot exchange rates.
• E) government intervention in cross-border trade that violates the assumption of efficient markets.

---

Definitions:

Alice Walker

An American novelist, short story writer, poet, and social activist, best known for her 1982 novel "The Color Purple."

Womanist

A social theory deeply rooted in the racial and gender-based experiences of Black women, emphasizing equality and social change.

French Psychoanalytic Feminists

A group of French theorists who integrate psychoanalytic concepts with feminist analysis to explore the construction of gender and sexuality.

Oedipus Complex

A Freudian concept in psychoanalytic theory involving a child's subconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.