test reviewer 8

What is the meaning of purchasing power parity or (PPP)

_________accounts for market distortions like transportation costs, labor costs, tariffs, taxes, and quotas.

It states that the rate of price changes should be similar.

• relative form of PPP

• absolute form of PPP

What is the extention of absulote form of PPP??

• the rate of price ranger

• the law of one price

What is the formula shown in the picture

What is the formula shown in the picture

Which of the following does not include in Testing the PPP Theory???

• Conceptual Test

• Theory Test

• Statistical Test

What is the formula for solving a statistic test ???

• e f  Ih – I

• f = a0 + a 1 [ (1+ Ih)/(1+ If) – 1 ] + 

• Ph1 = Pf1 and Ph0 (1 + Ih ) = Pf0 (1 + If ) (1 + ef )

What are the reason why PPP does not occur consistenly ???

What is the big mac index ???

what is the theory suggests that currencies with higher interest rates will depreciate because the higher nominal rates reflect higher expected inflation.

• International Fisher Effect (IFE)

• Purchasing Power Parity or (PPP)