Which of the following statements is the MOST accurate?
A) Relative PPP is not a reasonable approximation to the data.
B) Relative PPP is sometimes a reasonable approximation to the data but often performs poorly.
C) Relative PPP is sometimes a reasonable approximation to the data.
D) PPP is sometimes a reasonable approximation to the data.
E) PPP is sometimes a reasonable approximation to the data but usually performs poorly.

Question

Quizplus · Accepted Answer

Relative Purchasing Power Parity (PPP) can indeed sometimes provide a reasonable approximation to the data, but its performance can vary, and it often performs poorly in predicting exchange rate movements due to various factors like trade barriers, market imperfections, and differences in consumption patterns across countries.

Which of the Following Statements Is the MOST Accurate