The exchange rate between the currencies of two countries will be equal to the ratio of the price indices in these countries is explained by
A. Inflation adjustment
B. Purchase power parity
C. Interest rate parity
D. Transaction exposure
Answer:B
The exchange rate between the currencies of two countries will be equal to the ratio of the price indices in these countries is explained by
A. Inflation adjustment B. Purchase power parity C. Interest rate parity D. Transaction exposure