If Absolute Purchasing Power Parity Holds, Under Fixed Exchange Rates

question 9

Multiple Choice

If absolute purchasing power parity holds, under fixed exchange rates:

• A)the home interest rate equals the foreign interest rate.
• B)the home inflation rate equals the foreign inflation rate.
• C)the growth rate of the nominal exchange rate is zero.
• D)all of the above.

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Definitions:

Net Energy

The difference between the energy expended to harvest an energy source and the amount of energy gained from that source.

Sustainable Energy

Energy obtained from sources that are essentially inexhaustible and capable of being replenished or maintained for future generations without depleting natural resources.

Full-Cost Pricing

A pricing strategy that includes all direct, indirect, fixed, and variable costs in the price of a product or service.