If the Purchasing Power of a Dollar Is Greater Than

question 204

Multiple Choice

If the purchasing power of a dollar is greater than the purchasing power of the yen,purchasing power parity would predict that

• A)in the short run,exchange rates will move to equalize the purchasing power of the dollar and the yen.
• B)in the long run,exchange rates will move to equalize the purchasing power of the dollar and the yen.
• C)in the long run,interest rates will move to equalize the purchasing power of the dollar and the yen.
• D)in the short run,interest rates will move to equalize the purchasing power of the dollar and the yen.