In View of the Fact That PPP Is the Manifestation

question 67

Multiple Choice

In view of the fact that PPP is the manifestation of the law of one price applied to a standard commodity basket,

• A)it will hold only if the prices of the constituent commodities are equalized across countries in a given currency.
• B)it will hold only if the composition of the consumption basket is the same across countries.
• C)it will hold only if the prices of the constituent commodities are equalized across countries in a given currency or if the composition of the consumption basket is the same across countries.
• D)none of the options

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Definitions:

Price Restrictions

Regulations or limitations placed on the pricing of goods and services, often to control inflation or protect consumers.

Excess Demand

Excess Demand occurs when the quantity demanded of a good or service exceeds its quantity supplied at a particular price.

Government Intervention

Actions taken by a government to influence or directly regulate the economy, markets, or specific industries, often to correct market failures or promote social welfare.

Excess Demand

Occurs when the quantity demanded of a good or service at a given price exceeds the quantity supplied, often leading to a shortage in the market.