Under the Theory of Purchasing Power Parity,an Increase in the Australian

Multiple Choice

Under the theory of purchasing power parity,an increase in the Australian price level of 5%,relative to the Japanese price level,should result in a:

A) 5% rise in the Australian dollar.
B) 5% rise in the Japanese yen.
C) rise in the yen by an amount depending on what happens to the real exchange rate.
D) rise in the Australian dollar by an amount depending on what happens to the real exchange rate.