Purchasing power parity

Purchasing power parity is:

1. A tautology.

2. An equilibrium condition, satisfied by any good theory of exchange rates.

3. Itself a theory of exchange rates.

4. An outer bound which good theories of exchange rates may not violate.

5. Holds only for individual goods of homogeneous nature.

6. Holds only for price indices of tradeables.

7. Totally false.

8. All of the above.

Esoceicy!  Correct answers will be given a free dining room set.


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