"Fluctuations in exchange rates, other things remaining the same, creates a situation in which money buys the same amount of goods and services in different currencies
" What does the previous statement describe? Will these fluctuations occur in the short run or the long run?
The statement describes purchasing power parity, the proposition that money will buy the same amount of goods and services in different currencies. The effects of purchasing power parity will change the exchange rate in the long run. In the short run, deviations from purchasing power parity can occur.
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When a firm increased its output by one unit, its AC rose from $45 to $50. This implies that its MC is
A) $5. B) between $45 and $50. C) greater than $50. D) Cannot be determined from the above information
"Dumping" refers to
A) the sale of goods abroad at a price below their cost and below the price charged in the domestic market. B) unloading of foreign goods on domestic docks. C) government actions to remedy "unfair" trade practices. D) buying goods at low prices in foreign countries and selling them at high prices in the United States.