If the PPP Is Satisfied Then

question 25

Multiple Choice

If the PPP is satisfied then:

• A) the nominal exchange rate stays constant over time.
• B) the nominal exchange rate may depreciate or appreciate over time but the rate of this depreciation/appreciation stays constant.
• C) SP*/P = 1, where S = nominal exchange rate, P* = foreign country price level, P = home country price level.
• D) SP*/P = constant (not necessary 1), where S = nominal exchange rate, P* = foreign country price level, P = home country price level.

---

Definitions:

Amygdala

A region of the brain involved in experiencing emotions, especially fear and the processing of emotional memories.

Visual Cortex

The region of the brain responsible for processing visual information.

Experience-expectant Development

A process by which the brain develops and modifies itself through ordinary experiences, such as sensory stimulation and movement, which are expected in the environment.

Congenital Cataract

A vision impairment present at birth where the lens of the eye is cloudy or opaque, affecting clarity of vision.