Deviations from Purchasing Power Parity Will Be Increasingly Higher as International

question 54

Multiple Choice

Deviations from purchasing power parity will be increasingly higher as international trade tariffs become more restrictive.The main reason for this phenomenon is that:

• A)arbitrage activities become less profitable.
• B)governments prefer purchasing power parity not to hold.
• C)the interest rate parity fails to hold.
• D)goods become more differentiated across countries.
• E)individuals develop hatred toward closed economies.

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Definitions:

Variable Ratio

A schedule of reinforcement where a response is reinforced after an unpredictable number of responses, making it highly resistant to extinction.

Fixed Ratio

A schedule of reinforcement where a response is reinforced only after a specified number of responses have occurred.

Variable Interval

A schedule in operant conditioning where a response is rewarded after an unpredictable amount of time has passed.

Premack Principle

A theory that more probable behaviors can reinforce less probable behaviors.