[amp_mcq option1=”1922″ option2=”1923″ option3=”1921″ option4=”1924″ correct=”option1″]<\/p>\n
The correct answer is: A. 1922.<\/p>\n
Purchasing power parity (PPP) is a theory of exchange rates that states that in the long run, exchange rates between currencies will adjust in such a way that the purchasing power of money will be the same in each country. This means that if a basket of goods costs $100 in the United States and \u00e2\u0082\u00ac100 in Europe, then the exchange rate between the US dollar and the euro should be $1 = \u00e2\u0082\u00ac1.<\/p>\n
The PPP theory was first proposed by Gustav Cassel in 1922. Cassel was a Swedish economist who was interested in the problem of hyperinflation. He argued that the exchange rate between two currencies should be based on the relative purchasing power of those currencies.<\/p>\n
The PPP theory has been used to explain exchange rate movements in the past. However, it is not always a reliable predictor of future exchange rates. This is because there are many factors that can affect exchange rates, including interest rates, inflation, and political stability.<\/p>\n
Despite its limitations, the PPP theory is a useful tool for understanding exchange rates. It can help to explain why exchange rates change over time and to identify undervalued or overvalued currencies.<\/p>\n
The other options are incorrect because they are not the year in which Gustav Cassel proposed the PPP theory.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”1922″ option2=”1923″ option3=”1921″ option4=”1924″ correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-44863","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n