The Purchasing Power Parity Hypothesis Implies That an Increase in Inflation

question 13

Multiple Choice

The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time

• A) increase exports
• B) reduce the competitive pressure on prices
• C) lower the value of the currency in the country with the higher inflation rate
• D) increase foreign aid
• E) increase the speculative demand for the currency