Relative Purchasing Power Parity (RPPP) Is Different Than Purchasing Power

question 10

Multiple Choice

Relative purchasing power parity (RPPP) is different than purchasing power parity (PPP) because:

• A) PPP is based on the idea that LOP does not hold while it does for RPPP.
• B) under PPP exchange rates adjust so that the market basket of goods cost the same regardless of country while for RPPP the LOP does not hold.
• C) PPP is based on the idea that LOP does not hold while for RPPP the rate of change in the price level in one country relative the rate of change in the price level of another country determines the change in the exchange rate.
• D) for RPPP the rate of change in the price level in one country relative the rate of change in the price level of another country determines the change in the exchange rate while under PPP exchange rates adjust so that the market basket of goods cost the same regardless of country.

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Definitions:

Net Income

Signifies the net income of a corporation following the subtraction of all costs and tax obligations from the overall revenue.

Inventory Turnover

A measure showing the frequency at which a company's inventory is sold and replenished within a given timeframe.

Days in Inventory

A financial metric that calculates the average number of days a company holds inventory before it is sold.

Consigned Goods

Items that are given to a third party to sell but remain the property of the seller until sold.