Which of the following is true about PPP theory?
A) The theory explains that the change in the exchange rate between two currencies is proportional to the change in the ratio in the two countries' general price levels
B) The theory explains that the change in the exchange rate between two currencies is greater than the change in the ratio in the two countries' general price levels
C) The theory explains that the change in the exchange rate between two currencies is less than the change in the ratio in the two countries' general price levels
D) The theory explains that exchange rates and price levels are unrelated
Correct Answer:
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