Note that, in the previous question, the price level eventually increases by 20% (in the long run) due to money neutrality and the domestic interest rate temporarily falls below the foreign interest rate (over the short run) to offset the temporary increase in the domestic real money supply. the Since the long run decrease - in the exchange rate must be equal to + 20% due to interest parity immediate increase in the exchange rate must be equal to - 20% due to purchasing power parity