Absolutely Purchasing Power Parity Means

question 36

Multiple Choice

Absolutely purchasing power parity means:

• A)the quantity of goods that can be bought in the home country equals the quantity of good that can be bought in the foreign country.
• B)buying and selling goods looks equally attractive in both countries.
• C)the nominal exchange rate is the ratio of the foreign price to the home price.
• D)all of the above.

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Definitions:

Production Technique

The method or process used to produce goods or services, often involving particular technologies or strategies.

Economically Efficient

A state where resources are allocated in a way that maximizes the net benefit to society.

Market System

A financial system where investment, production, and distribution decisions are dictated by price signals resulting from the interplay of supply and demand forces.

Fundamental Question

Fundamental Question refers to the basic questions any economic system must answer, which include what to produce, how to produce, and for whom to produce.