Which of the following statements regarding purchasing power parity (PPP) is true?
A) Overseas evidence mostly supports PPP,provided that transaction costs are factored into the model.
B) International comparisons using current exchange rates can be misleading because deviations from PPP are substantially larger in the long run than in the short run.
C) Under PPP,a country with a low inflation rate will have an appreciating exchange rate.
D) None of the given options.
Correct Answer:
Verified
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