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

question 11

Multiple Choice

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

• A)The United States will import more British goods and services
• B)The US will now demand more pounds
• C)The UK will supply less pounds to the US
• D)US dollar will appreciate

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