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If the $/ spot rate is $0.40/ and the Purchasing Power Parity $/ rate is $0.60/, a. $ is undervalued and is expected to appreciate.

If the $/ spot rate is $0.40/ and the Purchasing Power Parity $/ rate is $0.60/,

a. $ is undervalued and is expected to appreciate.

b. $ is overvalued and is expected to appreciate.

c. $ is overvalued and is expected to depreciate.

d. $ is undervalued and is expected to depreciate.

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