Which of the Following Statements About Purchasing Power Parity (PPP)is

question 18

Multiple Choice

Which of the following statements about purchasing power parity (PPP) is true?

• A)If PPP always holds, then the differences in interest rates across countries can be explained by differences in inflation rates.
• B)PPP states that the current forward rate must be an unbiased predictor of the expected future spot rate.
• C)PPP implies that expected inflation rates should be the same across countries.
• D)PPP implies that nominal interest rates should be the same across countries.

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