According to the Relative Version of Purchasing Power Parity, When

question 13

Multiple Choice

According to the relative version of purchasing power parity, when the inflation differential between the foreign country and the home country is positive:

• A)the domestic currency tends to depreciate.
• B)the domestic currency tends to appreciate.
• C)the inflation rate in the home country tends to decrease.
• D)the inflation rate in the home country overshoots.

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