Which of the Following Is a Reason for the Failure

question 36

Multiple Choice

Which of the following is a reason for the failure of PPP to predict exchange rates accurately?

• A)PPP takes transportation costs into consideration while predicting exchange rates.
• B)PPP assumes no barriers to international trade while predicting exchange rates.
• C)PPP considers the role of people's confidence and beliefs about a nation's economy in exchange rate predictions.
• D)PPP does not take into account the effect of the market forces of demand and supply.

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Definitions:

Hydrogen

A chemical element with the symbol H and atomic number 1, it is the lightest and most abundant chemical substance in the universe.

Oxygen

A chemical element (symbol O) with atomic number 8, essential for most forms of life and crucial in combustion processes.

Limiting Reactant

The reactant in a chemical reaction that is completely consumed first, limiting the amount of product that can be formed.

NaOH

Sodium hydroxide, a strong base used in the manufacture of soap, paper, and many other chemicals; it is highly caustic.