If the Home Inflation Rate Is 5% and the Foreign

question 59

Multiple Choice

If the home inflation rate is 5% and the foreign inflation rate is 9%, then by relative purchasing power parity the home country would expect is exchange rate to:

• A)rise in value by 5%.
• B)fall in value by 5%.
• C)rise value by 4%.
• D)fall in value by 4%.

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