According to the purchasing power parity theory, exchange rates will eventually adjust such that they equalize the various

Question

Quizplus · Accepted Answer

The purchasing power parity theory states that in the long run, exchange rates will adjust such that the prices of goods and services in different countries will be equalized. This means that currencies’ values in terms of goods and services will also be equalized. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect as they do not reflect the main concept of the purchasing power parity theory.

According to the Purchasing Power Parity Theory, Exchange Rates Will