If the purchasing power of a Canadian dollar is less than the purchasing power of the euro, purchasing power parity would predict that
A) in the short run, exchange rates will move to equalize the purchasing power of the Canadian dollar and the euro.
B) in the long run, exchange rates will move to equalize the purchasing power of the Canadian dollar and the euro.
C) in the long run, interest rates will move to equalize the purchasing power of the Canadian dollar and the euro.
D) in the short run, interest rates will move to equalize the purchasing power of the Canadian dollar and the euro.
E) in the long run, the Canadian economy will grow more quickly than the eurozone economy.
Correct Answer:
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