Table 31-1

-Refer to Table 31-1. For which countries in the table does purchasing-power parity hold?
A)Bolivia and Japan
B)Bolivia and Morocco
C)Japan and Morocco
D)Norway and Thailand

Question

Table 31-1
 
-Refer to Table 31-1. For which countries in the table does purchasing-power parity hold?
A)Bolivia and Japan 
B)Bolivia and Morocco 
C)Japan and Morocco 
D)Norway and Thailand

Quizplus · Accepted Answer

Purchasing-power parity (PPP) holds when exchange rates and price levels in different countries are in equilibrium. In the table, only Bolivia and Morocco have the same PPP exchange rate as the actual exchange rate, indicating that PPP is holding for these two countries. The PPP exchange rates for Japan, Norway, and Thailand are all different from their actual exchange rates, indicating that PPP is not holding for these countries. Therefore, the best choice is B, which includes the two countries (Bolivia and Morocco) for which PPP holds.

Table 31-1 -Refer to Table 31-1. for Which Countries in the Table