According to Purchasing-Power Parity,if Two Countries Have the Same Price

question 61

Multiple Choice

According to purchasing-power parity,if two countries have the same price level because they have the same prices for all goods and services,then which of the following would equal 1?

• A)the real exchange rate,but not the nominal exchange rate
• B)the nominal exchange rate,but not the real exchange rate
• C)the real exchange rate and the nominal exchange rate
• D)neither the real exchange rate nor the nominal exchange rate

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