Purchasing Power Parity Is the Theory That Nominal Exchange Rates

question 30

Multiple Choice

Purchasing power parity is the theory that nominal exchange rates are determined:

• A)by the forces of supply and demand.
• B)by real exchange rates.
• C)as necessary to achieve the fundamental value of the exchange rate.
• D)as necessary for the law of one price to hold.

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Definitions:

Commission

An instruction, command, or duty given to a person or group of people.

Fixed-ratio Schedule

This is a schedule of reinforcement where a response is rewarded only after a specified number of responses.

Operant Conditioning

A learning process where behavior is controlled by consequences, including reinforcements and punishments to increase or decrease the behavior's occurrence.

Partial Reinforcement

A conditioning schedule where only a portion of responses are reinforced, leading to slower acquisition of a response but greater resistance to extinction.