According to the Doctrine of Purchasing-Power Parity,which of the Following

question 23

Multiple Choice

According to the doctrine of purchasing-power parity,which of the following should depreciate if over the next year the inflation rate is higher in the U.S.than in the Euro area?

• A)both the U.S.real exchange rate and the U.S.nominal exchange rate
• B)the U.S.real exchange rate,but not the U.S.nominal exchange rate
• C)the U.S.nominal exchange rate,but not the U.S.real exchange rate
• D)neither the U.S.nominal exchange rate nor the U.S.real exchange rate

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