The Theory of Purchasing Power Parity Cannot Fully Explain Exchange

question 90

Multiple Choice

The theory of purchasing power parity cannot fully explain exchange rate movements because

• A) all goods are identical even if produced in different countries.
• B) monetary policy differs across countries.
• C) some goods are not traded between countries.
• D) fiscal policy differs across countries.

---

Definitions:

Americans

Residents or citizens of the United States of America.

Unions

Organizations formed by workers to protect their rights and interests, including negotiating wages and working conditions with employers.

AFL

The American Federation of Labor, a national federation of labor unions in the United States, initially founded in 1886.

Predecessor

An entity or person that came before another in a specific role or position.