If Canadian inflation is 4 percent while Japanese inflation is 7 percent, PPP theory predicts that the Japanese currency will

Question

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According to Purchasing Power Parity (PPP) theory, a currency will depreciate if its country's inflation rate is higher than that of another country. Since Japanese inflation is 3 percent higher than Canadian inflation, the Japanese currency is expected to depreciate by 3 percent.

If Canadian Inflation Is 4 Percent While Japanese Inflation Is