Theory which considers change in exchange rate with fluctuations in inflation rates is classified as

A liquidated power parity
B purchasing power parity
C selling power parity
D volatile power parity

Correct Answer: purchasing power parity

Theory which considers change in exchange rate with fluctuations in inflation rates is classified as purchasing power parity. Purchasing power parity (PPP) is an economic theory that compares different countries' currencies through a "basket of goods" approach.
Bissoy MCQ
#Management #International Finance And Treasury

Related Questions

Which exchange rate theory focuses on the inflation exchange rate relationship?
A Interest rate parity
B International Fisher Effect
C Purchasing power parity
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B expected in future
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B constant rate
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A There are certain disadvantages for the United States economy attached to devaluation
B The prospect of devaluation results in a speculative outflow of funds
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A There are certain disadvantages for the Bangladesh economy attached to devaluation
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