Multiple Choice
According to the theory of purchasing power parity, if the price level in France rises by 6 percent and the price level in the United States rises by 4 percent, then the dollar will
A) appreciate by 2 percent against the euro in the short run.
B) depreciate by 2 percent against the euro in the short run.
C) appreciate by 2 percent against the euro in the long run.
D) depreciate by 2 percent against the euro in the long run.
Correct Answer:
Verified
Correct Answer:
Verified
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