Which of the following is a FALSE statement concerning purchasing power parity?
A) Purchasing power parity states that dollars will tend to exchange for pounds at a rate that maintains a constant purchasing power of a given quantity of a currency.
B) Over the long term, a Big Mac in New York will tend to cost the same as a Big Mac in London.
C) There should not be significant deviations in the long-run value of purchasing power parity.
D) Over the long run, purchasing power parity exerts influence over exchange rates.
E) An overvalued dollar buys more in Britain than it does in the United States.
ANSWER
C
Place an order in 3 easy steps. Takes less than 5 mins.