If the Theory of Purchasing Power Parity Is Correct,which of the Following

question 8

Multiple Choice

If the theory of purchasing power parity is correct,which of the following statements should be true in the long run?

• A) The percentage change in the nominal exchange rate equals the foreign inflation rate minus the domestic inflation rate.
• B) The percentage change in the real exchange rate equals the foreign inflation rate plus the domestic inflation rate.
• C) The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate minus the sum of the foreign inflation rate and the domestic inflation rate.
• D) The percentage change in the nominal exchange rate equals zero.

---

Definitions:

Community Participation

The process of involving members of a community in decision-making and activities that affect their lives or environments.

Intersectoral Cooperation

Collaboration between different sectors of society, including public, private, and non-governmental organizations, to achieve common objectives.

Intersectoral Cooperation

Collaborative efforts among various sectors of society, including public, private, and not-for-profit organizations, to achieve common goals.

Community Vegetable Gardens

Shared plots of land where members of a community can grow vegetables for personal or communal consumption.