Purchasing Power Parity Theory States That Given Relatively Efficient Markets

question 4

Multiple Choice

Purchasing power parity theory states that given relatively efficient markets, the price of a "basket of goods" should be

• A) much less in industrialized countries.
• B) much less in third world countries.
• C) variable depending upon the current rate of exchange between the producer and consumer of the products in the "basket."
• D) roughly equivalent in each country.

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Definitions:

Marginal Utility

The additional satisfaction or utility received by a consumer from consuming one more unit of a good or service.

Macaroni And Cheese

A popular dish made typically from cooked macaroni pasta and a cheese sauce, often with added ingredients such as breadcrumbs or meat.

Serving

The portion or quantity of food designated as a single helping.

Marginal Utility

The additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a good or service.