Suppose that a currency's value is found to be overvalued by using purchasing power parity.Then

Question

Quizplus · Accepted Answer

If a currency is found to be overvalued using purchasing power parity, it means that the currency's current exchange rate is too high compared to its true purchasing power. This implies that the currency will eventually become less valuable in the future, which indicates that the currency will depreciate. However, we cannot predict exactly when this will happen or how much the currency will depreciate. So, option B is the correct answer.

Suppose That a Currency's Value Is Found to Be Overvalued