Which of the Following Is Indicated by Research Regarding Purchasing

question 48

Multiple Choice

Which of the following is indicated by research regarding purchasing power parity (PPP) ?

• A) PPP clearly holds in the short run.
• B) Deviations from PPP are reduced in the long run.
• C) PPP clearly holds in the long run.
• D) There is no relationship between inflation differentials and exchange rate movements in the short run or long run.

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