The purchasing power parity (PPP) theory argues that the exchange rate will
A) increase if a country is experiencing inflation.
B) change even if relative prices remain unchanged.
C) increase if a country is experiencing deflation.
D) change if relative prices change.

Question

Quizplus · Accepted Answer

The PPP theory argues that the exchange rate will change if relative prices change.

The Purchasing Power Parity (PPP) Theory Argues That the Exchange