The purchasing power parity theory is a good predictor of all of the following t

Question

The purchasing power parity theory is a good predictor of all of the following the loop ran tendencies between changes in the price level and the exchange late of two countries interest rate differentials between two countries when there are strong barriers preventing trade between lire two countries how intervention in exchange markets by central banks influences prices in various countries tire day today relationship between changes in the price level and the exchange rate of two countries The main goal of tire Bretton Woods meeting was to curb inflation encourage sold production set world prices for gold set up a new international system of payments and to stabilize exchange rates help less-developed countries of the Third World to develop economically

Explanation / Answer

6. The purchasing power parity theory recognizes that exchange rates between two countries will adjust in the long run to reflect price level differences between two countries.

7. The motive was to regulate the international monetary and financial order after the conclusion ofWorld War II and set up a new international system of payments to stabilize exchange rates.

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