Assume that the U.S.inflation rate rate is higher than the New Zealand inflation rate.This will cause U.S.consumers to ______________ their imports from New Zealand and New Zealand consumers to ______________ their imports from the U.S.According to purchasing power parity (PPP),this will results in a(n)___________ of the New Zealand dollar (NZ$).

Question

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Higher U.S. inflation makes U.S. goods more expensive relative to New Zealand goods, leading U.S. consumers to increase imports from New Zealand. Conversely, New Zealand consumers will reduce imports from the U.S. due to relatively higher prices. According to PPP, this increased demand for New Zealand goods and currency will lead to an appreciation of the New Zealand dollar.

Assume That the U