Which theory says that in the long run the exchange rate between two currencies should move toward equalizing the cost in each country of an identical basket of internationally traded goods?

Question

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The theory that says in the long run the exchange rate between two currencies should move toward equalizing the cost in each country of an identical basket of internationally traded goods is the Purchasing Power Parity (PPP) theory. Choice B, CPI theory, is a measure of inflation and not directly related to exchange rates. Choice C, FEE theory, and Choice D, BMI theory, are not recognized economic theories.

Which Theory Says That in the Long Run the Exchange