​The Purchasing Power Parity Predicts That If the Price Level

question 30

Multiple Choice

​The purchasing power parity predicts that if the price level in the US falls relative to Mexico,

• A)​The dollar will appreciate relative to the peso
• B)The dollar will depreciate relative to the peso
• C)There is no effect on either currency
• D)​PPP predicts price level will normalize in the long-run

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