Relative Purchasing Power Parity

Relative purchasing power parity:

A) States that identical items should cost the same regardless of the currency used to make the purchase.
B) Relates differences in inflation rates to changes in exchange rates.
C) Compares the real rate of return to the nominal rate of return.
D) Looks at the factors that determine the changes in interest rates.
E) Analyzes the changes in inflation rates to determine the cause.