According to the Purchasing Power Parity Theory, a Rise in Canada

Multiple Choice

According to the purchasing power parity theory, a rise in Canada price level of 5 percent, and a rise in the Mexican price level of 6 percent cause ________.

A) the dollar to appreciate 1 percent relative to the peso
B) the dollar to depreciate 1 percent relative to the peso
C) the dollar to depreciate 5 percent relative to the peso
D) the dollar to appreciate 5 percent relative to the peso