The theory of PPP suggests that if one country's price level falls relative to another's,its currency should

Question

Quizplus · Accepted Answer

The theory of Purchasing Power Parity (PPP) suggests that if a country's price level falls relative to another's, its currency should appreciate to maintain the parity in purchasing power. This means goods and services in the country become cheaper compared to the other country, increasing demand for its currency.

The Theory of PPP Suggests That If One Country's Price