_________ theory states that the exchange rate between currencies of two countries should be equal to the ratio of the countries price levels.
A)IRP
B)PPP
C)Fisher`s
D)T Bills

Question

Quizplus · Accepted Answer

Purchasing Power Parity (PPP) theory posits that the exchange rate between two countries' currencies should equal the ratio of the countries' price levels, ensuring that identical goods cost the same in both countries when priced in the same currency.

_________ Theory States That the Exchange Rate Between Currencies of Two