Purchasing Power Parity

Purchasing power parity

A) allows for both countries' currencies to appreciate at their own rates of inflation.
B) will tend to cause those currencies with lower inflation rates to depreciate.
C) is an index of the average value of exchange rates.
D) holds exactly in the short run but not in the long run.
E) is a theory that says price levels in two countries should be equal when measured in a common currency.