If PPP and Uncovered Interest Parity Hold, Then the Long-Run

question 69

Multiple Choice

If PPP and uncovered interest parity hold, then the long-run real rate of interest in each nation:

• A) will never change.
• B) will equalize.
• C) will increase.
• D) will decrease.

---

Definitions:

Absorption Costing

An accounting method that includes all direct costs and allotted indirect costs associated with manufacturing a product.

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

Manufacturing Costs

Manufacturing costs encompass all expenses directly involved in the production of a good, including raw materials, labor, and factory overhead.

Direct Materials

Raw materials that are traceable directly to the manufacturing of a product.