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If Purchasing-Power Parity Holds,then the Value of the

Question 20

Multiple Choice

If purchasing-power parity holds,then the value of the


A) nominal exchange rate is equal to one.A dollar buys as many goods in the U.S.as it does overseas.
B) nominal exchange rate is equal to one.A dollar buys the quantity of foreign currency equal to the U.S.price level divided by the foreign country's price level.
C) real exchange rate is equal to one.A dollar buys as many goods in the U.S.as it does overseas.
D) real exchange rate is equal to one.A dollar buys the quantity of foreign currency equal to the U.S.price level divided by the foreign country's price level.

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