Theory which considers change in exchange rate with fluctuations in inflation rates is classified as

A. liquidated power parity

B. purchasing power parity

C. selling power parity

D. volatile power parity

Answer: Option B

Solution(By Examveda Team)

Theory which considers change in exchange rate with fluctuations in inflation rates is classified as purchasing power parity. Purchasing power parity (PPP) is an economic theory that compares different countries' currencies through a "basket of goods" approach.