Relative purchasing power parity says that the country with the higher inflation rate will see its currency depreciate.

Question

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According to relative purchasing power parity, the country with the higher inflation rate will see its currency depreciate as the higher inflation reduces the value of its currency relative to other countries with lower inflation rates. This is because the higher inflation rate means that goods and services in that country become relatively more expensive compared to other countries, reducing demand for its currency and leading to its depreciation.

Relative Purchasing Power Parity Says That the Country with the Higher