What Is the Theory of Purchasing Power Parity

question 146

Multiple Choice

What is the theory of purchasing power parity?

• A)A theory suggesting that exchange rates will change so as to equate the purchasing power of each currency.
• B)A theory suggesting that exchange rates tend to diverge over time.
• C)A theory suggesting that all currencies will be,in time,at par.
• D)A formula used to calculate the exchange rate of one currency for another.

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Definitions:

Proposition

A statement that expresses a judgement or opinion.

Proposition

A statement that expresses a judgment or opinion, which can be either true or false.

Statement

A declarative sentence that is capable of being true or false.

Grass

Plants belonging to the family Gramineae that are common worldwide in varied habitats and used for lawns, food, and fodder.