According to the Theory of Purchasing Power Parity, If the Inflation

question 74

Multiple Choice

According to the theory of purchasing power parity, if the inflation rate in England is greater than the inflation rate in Japan,

• A)the law of one price has been violated.
• B)the nominal value of the pound will appreciate against the yen.
• C)the nominal value of the yen will appreciate against the pound.
• D)the nominal value of the pound will appreciate against the yen, but only if the two countries are on the gold standard.

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Definitions:

Validity Assessment

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