A Principal Reason That Purchasing Power Parity Does Not Hold

question 21

Multiple Choice

A principal reason that purchasing power parity does not hold exactly in practice is

• A) that foreign and domestic assets are not perfect substitutes.
• B) the existence of non-traded goods.
• C) that consumers in different countries have different preferences.
• D) that costs of production are not the same in all countries.

---

Definitions:

Aggressively

In a manner that is forceful, assertive, or with intent to dominate or harm.

Punishment

A process by which a consequence immediately follows a behavior, decreasing the likelihood that the behavior will be repeated.

Bedwetting

A condition often seen in children, where involuntary urination occurs during sleep, also known as nocturnal enuresis.

Insight Learning

A form of cognitive learning where problem-solving occurs by means of a sudden reorganization of perceptions, leading to the solution without trial-and-error behavior.