If Purchasing-Power Parity Holds,a Dollar Will Buy

question 82

Multiple Choice

If purchasing-power parity holds,a dollar will buy

• A)more goods in foreign countries than in the United States.
• B)as many goods in foreign countries as it does in the United States.
• C)fewer goods in foreign countries than it does in the United States.
• D)None of the above is implied by purchasing-power parity.

---

Definitions:

Rate of Inflation

The pace at which the overall price level of goods and services increases, diminishing the buying power.

Probability Distribution

A statistical descriptor that comprehensively outlines all viable outcomes and their likelihoods for a random variable within a set boundary.

Expected Holding-Period Return

The total return anticipated on a bond if it is held until the end of its lifetime or holding period, including interest payments and capital gain or loss.

Probability Distribution

An analytical function that describes every probable value and its likelihood for a random variable over a predefined interval.