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Author Question: PPP holds better for low-inflation countries. Indicate whether the statement is true or ... (Read 47 times)

newbem

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on: Jun 30, 2018
PPP holds better for low-inflation countries.
 
  Indicate whether the statement is true or false

Question 2

Which of the following countries became the newest members of the European Union in 2007?
 
  A) Bulgaria and Romania
  B) Greece and Sweden
  C) Albania and Cyprus
  D) None of the above


smrerig

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Reply #1 on: Jun 30, 2018
Answer to Question 1

FALSE
Explanation: Opposite, in high-inflation countries changes in exchange rates are highly correlated with inflation differentials because the sheer magnitude of inflation overwhelms the relative price effects.

Answer to Question 2

A


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