Given a home country and a foreign country, purchasing power parity (PPP) suggests that:
A) a home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate.
B) a home currency will appreciate if the current home interest rate exceeds the current foreign interest rate.
C) a home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate.
D) a home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate.
Correct Answer:
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