A) PPP is a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate
B) There is no difference between PPP and exchange rate. PPP is specifically used in buying goods and exchange rate is specifically used for both goods and services
C) Market exchange rates are used to compare international income, as they are mostly stable
D) None of the above
Correct Answer: A
Solution :
[a] PPP is the amount of money required to buy the same goods and services, in two different countries. So, the exchange rate should be adjusted to bring equality between the two currencies that adjustment is known as PPP, Regarding Statement [c]. the PPP which is used to compare incomes on international because, they are stable, but market based exchanges rates are highly volatile.
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