The major things to remember about relative purchasing power parity are:

The major things to remember about relative purchasing power parity are:
 a. Long-run changes in the value of a nation's currency value depend on the country's inflation rate relative to foreign nations, and short-term exchange rate changes depend mainly on interest parity relationships.
  b. The higher a nation's relative inflation, the higher its currency value will be, and long-run changes in the value of a nation's currency value depend mainly on the country's inflation rate relative to foreign nations.
  c. The higher a nation's relative inflation, the lower its currency value will be, and long-run changes in the value of a nation's currency value depend on the country's inflation rate relative to foreign nations.
  d. Changes in relative international money supplies are the major cause of short-run exchange rate movements, and long-term exchange rate changes depend mainly on interest parity relationships.
  e. None of the above

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Question 2 - Exchange rates should change whenever a nation's:
 a. Relative expectations change.
  b. Relative income changes.
  c. Relative interest rates change.
  d. Relative price level changes.
  e. All of the above are true.

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Question 3 - Relative purchasing power parity is:
 a. More accurate the shorter the time period.
  b. Worse than absolute purchasing power parity at predicting changes in exchange rates.
  c. Highly inaccurate because of the conflict between monetary policy and fiscal policy.
  d. More accurate the longer the period of time.
  e. All the above.