An Empirical Fact That Runs Counter to Purchasing Power Parity

question 10

Multiple Choice

An empirical fact that runs counter to purchasing power parity theory is

• A) that in the long run, the real exchange rate is one
• B) that nations experiencing hyperinflation also experience nominal currency depreciations
• C) the law of one price
• D) that developing nations have lower price levels than developed nations
• E) that gold has essentially the same value throughout the world