If the purchasing power of the dollar is less than the purchasing power of the British pound, purchasing power parity predicts that the exchange rate will
A) decrease if the exchange rate is less than 1 pound per dollar.
B) be equal to the relative purchasing power across the currencies in the long run.
C) increase if the exchange rate is greater than 1 pound per dollar.
D) All of the above are correct.
B
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The firm in the figure above is ________ that is equal to ________
A) making an economic profit; $5.14 × 7 B) making an economic profit; $3.00 × 7 C) incurring an economic loss; $5.14 × 7 D) incurring an economic loss; ($5.14 - $3.00 ) × 7 E) making an economic profit; ($5.14 - $3.00 ) × 7
In a perfectly competitive market, if P > MC, then
A) too little output is being produced. B) too much output is being produced. C) production is efficient, as the firm is earning profits. D) the firm is paying a price for resources that is too high.