Multiple Choice
If purchasing-power parity holds but then U.S.prices rise,which of the following move the exchange rate back towards purchasing-power parity?
A) foreign prices rise or the U.S.nominal exchange rate rises
B) foreign prices rise or the U.S.nominal exchange rate falls
C) foreign prices fall or the U.S.nominal exchange rate rises
D) foreign prices fall or the U.S.nominal exchange rate falls
Correct Answer:
Verified
Correct Answer:
Verified
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