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Assume that inflation in Australia and New Zealand are currently equal at 4%. New information has arrived, suggesting that Australia can expect significantly higher inflation
Assume that inflation in Australia and New Zealand are currently equal at 4%. New information has arrived, suggesting that Australia can expect significantly higher inflation growth over the next year. In this case, PPP theory would predict Australias imports to ________, exports to ________, and the Australian dollar to _______ against the New Zealand dollar.
A. | Increase; decrease; depreciate. | |
B. | Decrease; increase; appreciate. | |
C. | Decrease, decrease, appreciate. | |
D. | Increase, decrease, appreciate. | |
E. | None of the options. |
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