If,in the Long Run,the Purchasing Power Parity Theory Held True

question 20

Multiple Choice

If,in the long run,the purchasing power parity theory held true for two countries,what would we expect of the exchange rate for each of these two countries?

• A)They would be proportionate to the relative price levels in the two countries.
• B)They would be at par.
• C)They would be unpredictable given the information provided.
• D)They would be gradually decrease.

---

Definitions:

Fibroblasts

Cells found in connective tissue, responsible for producing collagen and other fibers.

Adipocytes

Cells specialized in storing energy as fat, found mainly in adipose tissue.

Estrogen Levels

The concentration of estrogen hormones in the body, which are critical for sexual and reproductive development and regulation.

Growth Hormone

A peptide hormone produced by the pituitary gland that stimulates growth, cell reproduction, and cell regeneration in humans and other animals.