Trade Restrictions Can Prevent Purchasing Power Parity from Holding Because

question 47

Multiple Choice

Trade restrictions can prevent purchasing power parity from holding because:

• A) the time and energy of importation paperwork can add to the cost of the good sold.
• B) tariffs can add to the cost of the good sold.
• C) they can add costs to the selling price because they add to the seller's cost.
• D) All of these statements are true.

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Definitions:

Cheque Clearing

The process by which banks settle transactions made by cheques, transferring money from the payer's account to the payee's account.

Short-term Financing

Funding obtained to meet immediate to short-term (up to one year) financial obligations and operational expenditures of a business.

Cash Surpluses

Excess cash that a company generates beyond its needs, which can be used for investment, dividends, or to strengthen the balance sheet.

Marketability Risk

The risk that an asset cannot be sold quickly in the market without impacting its price significantly.