Purchasing Power Parity Says That

question 70

Multiple Choice

Purchasing power parity says that:

• A) differences in inflation rates between countries should have no impact on the exchange rate between those countries.
• B) differences in inflation rates between countries will create changes in exchange rates.
• C) the changes in exchange rates move independently from inflation.
• D) for inflation to change the exchange rate, the rate of inflation has to be the same between countries.

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Definitions:

Encumbrances

Legal claims or liabilities attached to property that can affect its use, value, or transferability, such as mortgages or liens.

Discharging

The act of releasing someone from an obligation, such as a debt, duty, or legal liability, often through the payment or fulfillment of what is owed.

Purchase Agreement

A legal document outlining the terms and conditions under which a sale of property will take place.