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According to the theory of purchasing power parity, whenever a country's price level is expected to fall relative to another country's price level
A) its currency's real exchange rate relative to the other country's currency should rise.
B) its currency should depreciate relative to the other country's currency.
C) its currency should appreciate relative to the other country's currency.
D) its nominal interest rate should rise relative to the other country's nominal interest rate.
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Money, Banking, and the Financial System

Money, Banking, and the Financial System


Edition: 3rd
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