Which of the Following Explains Why Purchasing Power Parity Does

question 108

Multiple Choice

Which of the following explains why purchasing power parity does not completely explain long-run fluctuations in exchange rates?

• A)Some goods and services produced in any country are not traded internationally.
• B)Consumer preferences for goods and services across countries are very similar.
• C)Most countries do not impose barriers to trade.
• D)Most countries have free markets with little, if any, government regulation.
• E)The prices of most internationally traded commodity are set in U.S.dollars.

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Definitions:

Capital Gain

The profit earned from the sale of assets or investments exceeding the purchase price.

Venture Investors

Individuals or firms that provide capital to start-up companies with high growth potential in exchange for equity.

High Potential

Referring to individuals or entities that exhibit the capacity for significant growth or achievement.

Need for Achievement

A psychological trait characterized by an individual's desire to achieve excellence and set challenging goals.