Question

What is the focus of Absolute Purchasing Power Parity?

a.

Equilibrium exchange rate

b.

Ratio of price levels in two countries

c.

Change in exchange rates over time

d.

Transportation costs in international trade

Answer: (b).Ratio of price levels in two countries Explanation:Absolute Purchasing Power Parity focuses on the equilibrium exchange rate between the currencies of two countries, which is equal to the ratio of the price levels in the two countries.

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Q. What is the focus of Absolute Purchasing Power Parity?

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