According to the Text,which of the Following Factors May Make

question 25

Multiple Choice

According to the text,which of the following factors may make the theory of purchasing power parity unrealistic?

• A)Purchasing power parity works only with traded goods.
• B)Trading countries may stop exchanging goods once prices between them equalize.
• C)Shipping,insurance,and transaction costs may reduce the implication of purchasing power parity.
• D)Prices may not equalize if goods arbitrage is reduced by trade barriers.
• E)The effects of purchasing power parity may not show up until many years have passed.

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