If the purchasing power of a dollar is less than the purchasing power of the euro,purchasing power parity would predict that

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Purchasing power parity suggests that exchange rates will adjust in the long run to equalize the purchasing power of different currencies. Therefore, if the purchasing power of a dollar is less than the purchasing power of the euro, in the long run, exchange rates will move to equalize their purchasing power. In the short run, other factors may influence exchange rates, such as interest rates, but in the long run, PPP should hold.

If the Purchasing Power of a Dollar Is Less Than