If Purchasing power parity (PPP) holds, a. the real exchange rate increases b. the real exchange...

Question

Question

If Purchasing power parity (PPP) holds,

a. the real exchange rate increases

b. the real exchange rate decreases

c. the real exchange rate does not change

d. prices in the foreign country will increase

business economics

Answer 1

Answer #1

Answer

Option c

the real exchange rate does not change

the real exchange rate and the PPP is the same as the real exchange rate means the costs of the goods same in any currency as the PPP do.

Answer 2

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