According to the Theory of Purchasing Power Parity, Why Should

question 8

Multiple Choice

According to the theory of purchasing power parity, why should identical goods have the same price in different locations?

• A) To prevent price gouging, international law mandates that identical goods must be sold for the same currency-adjusted price across all locations.
• B) If the goods were two different prices, it would cause an increase in supply of the good at the low-price location and a decrease in supply of the good at the high-price location, which would cause the prices in each location to converge to the same price.
• C) If the goods were two different prices, it would cause an increase in supply of the good at the high-price location and a decrease in supply of the good at the low-price location, which would cause the prices in each location to converge to the same price.
• D) If the goods were two different prices, it would cause a decrease in demand of the good at the low-price location and an increase in demand of the good at the high-price location, which would cause the prices in each location to converge to the same price.
• E) If the goods were two different prices, it would cause an increase in demand of the good solely at the low-price location until that good reached the same price as the good in the high-price location.

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Definitions:

Aerobic

Refers to processes or activities requiring the presence of oxygen, often related to exercise that improves the efficiency of the body's cardiovascular system in absorbing and transporting oxygen.

Heart Rate

The number of heartbeats per unit of time, usually per minute.

Blood Pressure

The pressure of the circulating blood against the walls of the blood vessels after being ejected from the heart.

Heart and Lungs

Key organs in the human body where the heart pumps blood and the lungs oxygenate it, playing crucial roles in the circulatory and respiratory systems respectively.