Which of the Below Statements Is FALSE

Multiple Choice

Which of the below statements is FALSE?

A) Spot exchange rates adjust to compensate for the relative inflation rate reflecting the so-called purchasing power parity relationship.
B) The purchasing power parity relationship posits that the exchange rate - the domestic price of the foreign currency - is proportional to the domestic inflation rate, and inversely proportional to foreign inflation.
C) Because of the importance of the euro in the international financial system, currency quotations are all relative to the euro.
D) Suppose that on day 1 the spot exchange rate between the U.S. dollar and country X is $0.80 and on the next day, day 2, it changes to $0.81. Thus, the currency unit of country X appreciated relative to the U.S. dollar from day 1 to day 2.