According to the Purchasing Power Parity Theory of Exchange Rates

question 89

Multiple Choice

According to the purchasing power parity theory of exchange rates:

• A)a dollar, when converted to other currencies at the prevailing flexible exchange rate, has the same purchasing power in various countries.
• B)in equilibrium, national currencies have equal value in terms of gold.
• C)the higher a nation's price level in terms of its own currency, the greater is the amount of foreign exchange it can obtain for a unit of its currency.
• D)all of the above are true.

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