3827EconomicsMedium
The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except?
Ainternational capital flows affect exchange rates
Binflation effects exchange rates
Cnot all products are internationally tradeable
Dgovernments sometimes impose trade restrictions such as tariffs and quotas
Correct answer
B. inflation effects exchange rates
Explanation
The correct answer is inflation effects exchange rates.