Which of the following is not a characteristic of purchasing power parity?
A) Long-run exchange rates move toward rates that would equalize the price of an identical basket of goods in any two countries
B) Focuses on flows of export and import goods
C) Short-run exchange rates move toward rates that would equalize the price of an identical basket of goods in any two countries
D) Exchange rate determined by demand and supply of certain currency relative to another currency
Correct Answer:
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