The Purchasing Power Parity Theory Helps Explain Long-Run Trends in Exchange

question 41

True/False

The purchasing power parity theory helps explain long-run trends in exchange rates, but not short-run fluctuations.

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Definitions:

Sleeper Effect

A delayed increase in the impact of a message that occurs when an initially discounted message becomes effective, as we forget its source or its source becomes less important over time.

Internal Attribution

The inference that a person's behavior is due to personal factors like character, motive, or belief.

Consistency Information

Information that supports the reliability or stability of a person's behavior or attitudes over time.

Fundamental Attribution Error

The tendency to overestimate the effect of personality or disposition and underestimate the effect of the situation in explaining social behavior.