If Purchasing Power Parity Holds Between the United States and China

question 8

Multiple Choice

If purchasing power parity holds between the United States and China:

• A) the real exchange rate must be 1.
• B) the nominal exchange rate must be 1.
• C) the United States must no longer have a trade deficit.
• D) China must no longer have a trade deficit.

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Definitions:

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A fundamental property of matter that exhibits positive or negative qualities and determines the electromagnetic interactions between particles.

Processed Information

Data that has been interpreted, organized, or structured in a meaningful way to support decision-making, understanding, or analysis.

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A distinct cell that carries messages through the nervous system; identified as a nerve cell.

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