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.

---

Definitions:

Ratio

A mathematical expression that compares two numbers or quantities, showing the relative size or amount of one to the other.

Absolute Frequency

The total count of occurrences or instances of a specific event or characteristic in a data set.

Chemical Element

A substance that cannot be broken down into simpler substances by chemical means and is identified by the number of protons in its atoms.

Variable

An element, feature, or factor that is likely to vary or change; often used in scientific experiments or mathematical equations.