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

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According to PPP theory, if the price level of one country falls relative to another, its currency should appreciate in the long run. This is because the cheaper country's goods become relatively cheaper, making exports more competitive, and increasing demand for the country's currency, which would then appreciate to bring the goods back to the pre-arbitrage level. However, in the short run, other factors such as interest rates, capital flows, and market sentiment might also affect the exchange rate.

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