Which of the Following Is a Reason for the Failure

question 47

Multiple Choice

Which of the following is a reason for the failure of the purchasing power parity (PPP) theory to predict exchange rates accurately?

• A)It assumes away transportation costs and trade barriers.
• B)It does not take into account the law of one price.
• C)It does not take into account the practice of arbitrage.
• D)It assumes that the markets are not efficient.
• E)It does not consider government influence on a nation's money supply.

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder characterized by persistent unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Avoidance Learning

A learning process where a subject learns to prevent an unpleasant experience by taking specific actions.

Superstitions

Beliefs or practices resulting from ignorance, fear of the unknown, trust in magic or chance, or a misunderstanding of causation.

Obsessive-Compulsive Behaviors

Repetitive actions or mental acts that a person feels compelled to perform, often driven by irrational fears or thoughts.