To Express the PPP Theory in Symbols,let P_$ Be the U.S.dollar

question 4

Multiple Choice

To express the PPP theory in symbols,let P_$ be the U.S.dollar price of a basket of particular goods and P_× be the price of the same basket of goods in Japanese yen.What does the purchasing power parity (PPP) theory predict to be the equivalent of the dollar/yen exchange rate,E_$/×?

• A)E_$/× = (1 + P_×)/P_$
• B)E_$/× = (1 + P_$)/P_×
• C)E_$/× = P_×/P_$
• D)E_$/× = P_$/P_×
• E)E_$/× = (1 + P_$)/(1 + P_×)

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Definitions:

Conforming

Adhering to or complying with a set standard, rule, or norm.

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Refers to a property or product that does not meet local zoning or building standards.

Shipment Contract

A contract under which a seller turns goods over to a carrier for delivery to a buyer. Both the title and risk of loss pass to the buyer when the goods are given to the carrier.

Proper Tender

A legal and financial term referring to the act of offering to deliver what is due under a contract, specifically in a manner that fulfills all conditions attached to the payment or delivery.