Purchasing Power Parity Says That

question 66

Multiple Choice

Purchasing power parity says that:

• A)Differences in inflation rates between countries should have no impact on the exchange rate between those countries
• B)Differences in inflation rates between countries will create changes in exchange rates
• C)The changes in exchange rates move independently from inflation
• D)For inflation to change the exchange rate, the rate of inflation has to be the same between countries