What Does Purchasing-Power Parity Imply

question 11

Multiple Choice

What does purchasing-power parity imply?

• A) that real incomes should be the same in all countries
• B) that the nominal exchange rates should be equal to 1 for all currencies
• C) that the price of a standard hamburger should be the same everywhere
• D) that the rent for an apartment should be the same everywhere

---

Definitions:

American System

An economic plan proposed by Henry Clay in the early 19th century, advocating for a strong banking system, protective tariffs, and federally funded transportation projects.

Market Economy

An economic system in which the prices of goods and services are determined in a free price system, largely governed by the forces of supply and demand.

American System

The American System was an economic plan that played a significant role in American policy during the first half of the 19th century. It advocated for a strong federal government to create a protective tariff, a national bank, and infrastructure improvements.

Northeast

A region in the United States known for its historical significance, economic output, and dense population, typically including states in the upper Northeastern part of the country.