Under Relative Purchasing-Power Parity

question 52

Multiple Choice

Under relative purchasing-power parity,

• A)the exchange rate equals the ratio of price indexes in two countries.
• B)interest-rate parity holds.
• C)absolute purchasing-power parity also holds.
• D)a currency depreciates relative to another currency by the amount by which the inflation rate is higher in the first country than in the second country.

---

Definitions:

Railroad Companies

Businesses involved in the operation of trains and railroads for the transportation of goods and passengers.

Pools

Agreements between companies to maintain prices at a certain level by controlling supply, a form of collusion often illegal in the U.S.

Market Forces

The economic factors affecting the price, demand, and supply of goods and services in a free market.

Railroads

Transportation networks consisting of tracks, trains, and stations used for the movement of goods and passengers, significantly contributing to economic development and expansion.