Multiple Choice
Assume a two-country world: Country A and Country B. Which of the following is correct about purchasing power parity (PPP) as related to these two countries?
A) If Country A's inflation rate exceeds Country B's inflation rate, Country A's currency will weaken.
B) If Country A's interest rate exceeds Country B's inflation rate, Country A's currency will weaken.
C) If Country A's interest rate exceeds Country B's inflation rate, Country A's currency will strengthen.
D) If Country B's inflation rate exceeds Country A's inflation rate, Country A's currency will weaken.
Correct Answer:
Verified
Correct Answer:
Verified
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