If Purchasing Power Parity Is Holding, What Will Happen to the Currency

question 85

Multiple Choice

If Purchasing Power Parity is holding, what will happen to the currency of a country with high inflation?

• A)Currency will appreciate.
• B)Currency will depreciate.
• C)No significant change in exchange rate.
• D)Currency will sell at a forward premium.

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Definitions:

35 Years

A period of thirty-five years, often referred to in the context of long-term investments or life events planning.

Invested

To distribute financial resources aiming for potential benefits down the line, including income or profits.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit over time.

Compounded Semi-Annually

The process of calculating and adding interest to the principal sum of a loan or deposit twice a year.