MCQOPTIONS
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| 1. |
Given a home country and a foreign country, purchasing power parity suggests that: |
| A. | the home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate; |
| B. | the home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate. |
| C. | the home currency will depreciate if the current home interest rate exceeds the current foreign interest rate; |
| D. | the home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate; |
| Answer» C. the home currency will depreciate if the current home interest rate exceeds the current foreign interest rate; | |