The theory of "purchasing power parity" (PPP) predicts that the
A) actual exchange rate will eventually exceed the PPP exchange rate.
B) actual exchange rate will eventually be lower than the PPP exchange rate.
C) actual exchange rate will eventually equal the PPP exchange rate.
D) there is no relationship between the actual exchange rate and the PPP exchange rate.
E) prices of of non-traded goods will be equalized across all countries.
Correct Answer:
Verified
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