According to Purchasing Power Parity, the Foreign Exchange Market Will

Multiple Choice

According to purchasing power parity, the foreign exchange market will

A) undervalue the dollar if inflation in the United States is greater than it is elsewhere.
B) no longer demand dollars if the inflation rate in the United States exceeds that of other nations.
C) adjust the value of the exchange rate to reflect differing inflation rates between nations.
D) result in a flow of dollars out of the United States whenever its rate of inflation is below that of other nations.