According to the Doctrine of Purchasing-Power Parity,which of the Following

Multiple Choice

According to the doctrine of purchasing-power parity,which of the following should depreciate if over the next year the inflation rate is higher in the U.S.than in the Euro area?

A) both the U.S.real exchange rate and the U.S.nominal exchange rate
B) the U.S.real exchange rate,but not the U.S.nominal exchange rate
C) the U.S.nominal exchange rate,but not the U.S.real exchange rate
D) neither the U.S.nominal exchange rate nor the U.S.real exchange rate