Studies of purchasing power parity covering many years are more likely to show evidence of it than studies done on short-run periods of time.

Question

Quizplus · Accepted Answer

Purchasing Power Parity (PPP) tends to hold more accurately over the long term as prices and exchange rates adjust to reflect the relative costs of goods and services between countries. Short-term fluctuations in exchange rates, influenced by speculative movements, interest rates, and temporary trade imbalances, may not reflect underlying purchasing power equivalencies, making PPP more evident in long-term studies.

Studies of Purchasing Power Parity Covering Many Years Are More