Purchasing Power Parity is most useful in explaining currency misalignments when it compares:
A)countries located in the same region of the world.
B)dissimilar economies.
C)countries at a similar stage of development.
D)longer periods of time as opposed to shorter periods of time.

Question

Quizplus · Accepted Answer

Purchasing Power Parity is most useful in explaining currency misalignments when it compares countries at a similar stage of development. This is because countries at a similar stage of development are likely to have similar inflation rates and similar levels of economic growth. As a result, their currencies are more likely to be in equilibrium with each other.

Purchasing Power Parity Is Most Useful in Explaining Currency Misalignments