Floating Exchange Rates

question 34

Multiple Choice

Floating exchange rates

• A) systematically lead to much larger but less frequent short-run deviations from the absolute PPP.
• B) systematically lead to much larger and more frequent short-run deviations from the relative PPP.
• C) systematically lead to much smaller and less frequent short-run deviations from the relative PPP.
• D) systematically lead to much smaller but more frequent short-run deviations from the relative PPP.
• E) systematically lead to much smaller and less frequent short-run deviations from the absolute PPP.

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