Purchasing power parity does NOT hold in the short to medium run because
A)exports don't equal imports.
B)exchange rates fluctuate too much.
C)most business cycles are caused by shocks to aggregate demand.
D)countries produce different goods.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) does not hold in the short to medium run because countries produce different goods, leading to variations in prices that are not immediately corrected by exchange rate adjustments.

Purchasing Power Parity Does NOT Hold in the Short to Medium