Question $1$

$1$ pts

Why do you think the purchasing power parity theory is the long run theory? Select one the most appropriate answer.

No correct answer.

Because it excludes price rigidity.

Since purchasing power of any domestic currency can change only in the long run while it's constant in the short run.

Since it addresses the issues of exchange rate changes only assuming the full employment stage of the economy under constant money supply.

Since it examines exchange rates over a longer time horizon, typically over a year.

All answers are correct.

Because it implies that prices are sticky.