Which of the following statement is incorrect? O Most of the answers are correct. Diversifying investments across several countries often reduces risk. The absolute purchasing power parity theory posits that exchange rates are determined by the differences in the prices of a given market basket of traded goods and services when there are no trade barriers. An exchange rate of two currencies found by using a common third currency is known as an interest rate. Exchange rates can be expressed as the number of units of the domestic currency per one unit of the foreign currency.

Which of the following statement is incorrect? O Most of the answers are correct. Diversifying investments across several countries often reduces risk. The absolute purchasing power parity theory posits that exchange rates are determined by the differences in the prices of a given market basket of traded goods and services when there are no trade barriers. An exchange rate of two currencies found by using a common third currency is known as an interest rate. Exchange rates can be expressed as the number of units of the domestic currency per one unit of the foreign currency.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 8PA

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