Boulder, Inc., exports chairs to Europe (invoiced in U.S. dollars) and competes against local European companies. If purchasing power parity exists, why would Boulder not benefit from a stronger euro?

If purchasing power parity exists, a stronger euro would occur only because the U.S. inflation is -Select-higherlowerItem 1 than European inflation. It means that the prices of U.S.-made chairs will rise to a -Select-higherlowerItem 2 extent than the prices of chairs made in Europe. It would have offset the effect of the euro's -Select-appreciationdepreciationItem 3 .