Relative purchasing power parity is:
a. More accurate the shorter the time period.
b. Worse than absolute purchasing power parity at predicting changes in exchange rates.
c. Highly inaccurate because of the conflict between monetary policy and fiscal policy.
d. More accurate the longer the period of time.
e. All the above.
Question 2
Which of the following does not cause exchange rate fluctuations?
a. Changes in absolute international expectations but not relative international expectations.
b. Central bank interventions in the foreign exchange market.
c. Changes in relative international expectations.
d. Relative international price levels.
e. Changes in relative international incomes.
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