All of the Following Explain Why Purchasing Power Parity Does

question 86

Multiple Choice

All of the following explain why purchasing power parity does not completely explain long-run fluctuations in exchange rates except

• A)not all goods and services produced in any country are traded internationally.
• B)consumer preferences for goods and services differ across countries.
• C)some countries impose barriers to trade.
• D)most countries have free markets with little,if any,government regulation.

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Definitions:

National Banks

Financial institutions that are chartered by the federal government and play a key role in the country’s financial system and economy.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for the loans they take from the Federal Reserve Bank's lending facility.

Federal Reserve Banks

The 12 regional banks in the Federal Reserve System which serve as the central bank of the United States, responsible for implementing monetary policy, supervising and regulating financial institutions, and providing services to depository institutions, the U.S. government, and foreign official institutions.

Central Banks

National banks that provide financial and banking services for a country's government and commercial banking system, as well as implementing government's monetary policy and issuing currency.