According to the Purchasing Power Parity Theory,in the Long Run

question 110

Multiple Choice

According to the purchasing power parity theory,in the long run:

• A)the exchange rate between any two currencies should be equal all over the world.
• B)the value of the U.S.dollar should equal the value of the pound which should equal the value of the yen.
• C)inflation rates should equalize around the world.
• D)interest rates should equalize around the world.
• E)the exchange rate between the currencies of two countries should reflect the differences in price levels in the two countries.

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