Which of the Following Does Purchasing-Power Parity Imply

question 47

Multiple Choice

Which of the following does purchasing-power parity imply?

• A)the foreign price level times the nominal exchange rate (given as amount of foreign currency per dollar)equals the U.S.price level.
• B)The price of domestic goods relative to foreign goods cannot change.
• C)The nominal exchange rate is the ratio of foreign prices to U.S.prices.
• D)All of the above are correct.

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