Question

What does Relative Purchasing Power Parity acknowledge about markets?

a.

Markets are perfect

b.

Markets have uniform prices

c.

Markets are imperfect

d.

Markets have no impact on exchange rates

Answer: (c).Markets are imperfect Explanation:Relative Purchasing Power Parity acknowledges that markets are imperfect, and there are differences in transportation costs, rates of quotas and duties in different countries, implying that the price of similar or same products or services may not be the same in different markets.

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Q. What does Relative Purchasing Power Parity acknowledge about markets?

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