Which One of These Must Be True If Absolute Purchasing

question 38

Multiple Choice

Which one of these must be true if absolute purchasing power parity is to absolutely hold?

• A)Customer preferences for an item must be identical across markets.
• B)There must be greater demand for the item in one area as compared to another area.
• C)Forward rates must equal spot rates.
• D)The goods traded must have a feature unique to each individual market.
• E)Transaction costs must be imposed on both ends of a trade.

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Definitions:

Inattentional Blindness

Failing to see visible objects when our attention is directed elsewhere.

Videotape

Magnetic tape used for storing video and audio signals, historically used before digital recording became predominant.

Basketball

A team sport where two teams, typically of five players each, try to score by shooting a ball through a hoop elevated 10 feet above the ground.

Circadian Rhythm

The biological clock; regular bodily rhythms (for example, of temperature and wakefulness) that occur on a 24-hour cycle.