According to a survey of professional foreign exchange traders, the theory of purchasing power parity is considered to be "academic jargon."
Source. Cheung, Yin-Wong, and Menzie David Chinn, "Currency Traders and Exchange Rate Dynamics: A Survey of the US Market," Journal of International Money and Finan
Volume 20, Issue 4, August 2001, pp. 432-471
Which of the following are reasons why foreign-exchange traders might not find PPP to be useful as they trade currencies day-to-day? (Check all that apply)
A. Day-to-day movements in currencies are driven by the news.
B. Day-to-day movements in currencies are driven by short-term economic events.
C. Day-to-day movements in currencies can be driven by a large degree of random movements.
D. Day-to-day movements in currencies are driven by long-term economic events.
PPP is a
theory that generally only holds over a period of time