The Following Options Are All Important Reasons to Study the Theory

question 11

Multiple Choice

The following options are all important reasons to study the theory of PPP EXCEPT:

• A) it provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies.
• B) deviations from PPP significantly affect the profitability of firms.
• C) it is particularly useful in assessing cost-of-living differences across countries
• D) the deviations from the theory are very small when it comes to the determination of exchange rates

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Definitions:

Repressed Memories

Memories that have been unconsciously blocked due to being associated with a high level of stress or trauma, but can sometimes resurface.

Projection

A defense mechanism by which an individual ascribes their own unwanted emotions, traits, or impulses onto someone else.

Reaction Formation

A defense mechanism where an individual unconsciously replaces unacceptable thoughts or feelings with their opposites.

Sublimation

A defense mechanism where socially unacceptable impulses or idealizations are unconsciously transformed into socially acceptable actions or behavior.