The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
a. increase exports
b. reduce the competitive pressure on prices
c. lower the value of the currency in the country with the higher inflation rate
d. increase foreign aid
e. increase the speculative demand for the currency
Question 2
In the above scenario, the profit of the company will
a. increase.
b. decrease.
c. remains the same.
d. may increase or decrease.
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