Purchasing Power Parity Does Not Hold Up as Well in the Short

question 33

Multiple Choice

Purchasing power parity does not hold up as well in the short run as it does in the long run because

• A) prices are fixed in the short run and the resulting inflexibility is hard to describe theoretically.
• B) substitution among similar goods is nearly impossible when an international transaction is involved.
• C) goods arbitrage is not an instantaneous, costless process.
• D) its conclusions are drawn from price stability, a long-term phenomenon.
• E) all of the above.

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Definitions:

Erikson

A developmental psychologist known for his theory on the psychosocial development of humans.

Defense Mechanism

Psychological strategies brought into play by individuals, groups, or even nations to cope with realities and to maintain self-image.

Intellectualization

A defense mechanism where reasoning is used to block confrontation with an unconscious conflict and its associated emotional stress, where thinking is used to avoid feeling.

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The process of teaching a young child to control their bladder and bowel movements and to use the toilet for elimination.