Relative Purchasing Power Parity States That Exchange Rates Vary in Response

question 20

Multiple Choice

Relative purchasing power parity states that exchange rates vary in response to

• A)differences in interest rates between countries.
• B)changes in the trade barriers between countries.
• C)changes in the tax rates imposed by a country.
• D)differences in the inflation rates between countries.
• E)arbitrage trades involving the exchanged currencies.

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Definitions:

Cognitive Dissonance

A psychological theory that outlines the discomfort experienced when holding contradictory beliefs, values, or attitudes, leading to a change in one to reduce the dissonance.

Foot-In-The-Door

A persuasion technique where agreement to a small, initial request increases the likelihood of compliance with a larger, later request.

Western Cultures

Refers to societies typically found in Western Europe and North America, characterized by certain norms, values, and traditions.

Situational Attribution

The act of ascribing an individual's actions to outside or situational causes.