If Purchasing-Power Parity Holds,then the Value of the

question 35

Multiple Choice

If purchasing-power parity holds,then the value of the

• A)nominal exchange rate is equal to one.A dollar buys as many goods in the U.S.as it does overseas.
• B)nominal exchange rate is equal to one.A dollar buys the quantity of foreign currency equal to the U.S.price level divided by the foreign country's price level.
• C)real exchange rate is equal to one.A dollar buys as many goods in the U.S.as it does overseas.
• D)real exchange rate is equal to one.A dollar buys the quantity of foreign currency equal to the U.S.price level divided by the foreign country's price level.

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