The PPP Theory Tells Us That a Country with a High

question 94

Multiple Choice

The PPP theory tells us that a country with a high inflation rate will see:

• A) a depreciation in its currency exchange rate
• B) an appreciation in its currency exchange rate
• C) no change in its currency exchange rate as a result of the inflation rate
• D) economic stability as a result of high inflation
• E) price rises to match neighbouring country prices

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Definitions:

Social Identity

An individual's sense of who they are based on their group memberships, such as nationality, religion, or social class.

Outgroup

A term denoting any group you do not belong to or identify with, often perceived less favorably than one’s own group (ingroup).

Comparison

The act of evaluating two or more items, people, or situations to identify similarities, differences, or to ascertain superiority.

Uncertainty-Identity Theory

A social psychological theory suggesting that people join and identify with groups in order to reduce feelings of uncertainty about themselves and the world.