The Purchasing Power Parity Theory

question 163

Multiple Choice

The purchasing power parity theory

• A)is more a predictor of a long-run tendency than of the day-to-day relationship between changes in the price level and the exchange rate
• B)predicts that exchange rates between two currencies will adjust in the long run to reflect the price level difference between two countries
• C)is more a predictor of a short-run phenomenon than of a long-run relationship between the price level and the exchange rate between two countries
• D)is helpful in explaining long-run trends, even though trade barriers and central bank intervention may hinder the usefulness of the theory
• E)tells us that a country's currency generally will appreciate if its inflation rate is lower than that of the rest of the world

Grasp the requirements and implications of Section 402A of the Restatement of the Law of Torts concerning product liability.

Identify the conditions under which sellers are in breach of implied warranties.

Understand the role of the Magnuson-Moss Warranty Act and its administering body.

Understand the legal recourse available when purchasing stolen goods.

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