According to the Absolute PPP Theory,which of the Following Would

question 19

Multiple Choice

According to the absolute PPP theory,which of the following would occur if the price level in the US increases relative to the UK,and before this increase the dollar was in exchange rate equilibrium with the sterling?

• A)The United States will now find imports from the UK cheaper
• B)The US will now demand fewer pounds
• C)UK citizens will supply more pounds to the US
• D)US dollar will depreciate

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