1a. Given a home country and a foreign country, purchasing power parity (PPP) suggests that

Question options:

	a home currency will appreciate if the current home interest rate exceeds the current foreign interest rate.
	a home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate.
	a home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate.
	a home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate.

Question 1b.

0 / 6.66 points

Assume that the inflation rate in New Zealand is 3%, while the inflation rate in the U.S. is 8%. According to PPP, the New Zealand dollar should ____ by ____%. (Use the exact formula.)

Question options:

	appreciate; 3.11
	depreciate; 4.85
	depreciate; 3.11
	appreciate; 4.85

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Question 1c

0 / 6.66 points

Given a home country and a foreign country, international Fisher effect (IFE) suggests that:

Question options:

	a home currency will appreciate if the current foreign inflation rate exceeds the current home inflation rate.
	a home currency will depreciate if the current foreign interest rate exceeds the current home interest rate.
	a home currency will depreciate if the current foreign inflation rate exceeds the current home inflation rate.
	a home currency will appreciate if the current foreign interest rate exceeds the current home interest rate.