Which of the following is NOT an implication of the theory of purchasing power parity?
A) Exchange rates move to equalize the purchasing power of different currencies.
B) Exchange rates should be at a level that makes it possible to buy the same amount of goods and services with the equivalent amount of any country's currency in the long run.
C) A country with a higher inflation rate should experience an appreciation of its currency.
D) The real exchange rate should equal one.
Correct Answer:
Verified
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