Question

T/F: The theory of purchasing-power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does domestically.

Answer 1

Answer: The statement is TRUE.

Explanation: The theory of purchasing-power parity is an economic theory that tries to calculate the exchange rate between the currencies of two countries necessary so that the same basket of goods and services can be purchased in the currency of each one, that is, so that the purchasing power (or purchasing power) ) of both currencies is equivalent.