In the short term:
A)purchasing power parity can be accomplished,but only with government intervention to control prices.
B)purchasing power parity will be accomplished if markets are allowed to operate freely.
C)purchasing power parity is not reached and currency values do not tend to converge because of other factors affecting.
D)purchasing power parity is not reached buy currency values do tend to converge anyway.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) is a theory that suggests that over the long term, exchange rates between currencies should adjust to equalize the prices of goods and services across different countries. However, in the short term, other factors such as interest rates, inflation rates, trade flows, and market speculation can affect currency values and prevent PPP from being achieved. While government intervention or free market operations may influence exchange rates in the short term, they are not sufficient to achieve PPP.

In the Short Term