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QUESTION 22 The purchasing power parity (PPP) suggests that if a foreign country's inflation rate is below the inflation rate at home, home country consumers
QUESTION 22
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The purchasing power parity (PPP) suggests that if a foreign country's inflation rate is below the inflation rate at home, home country consumers will increase their imports from the foreign country, and foreign consumers will lower their demand for home country products. These market forces cause the foreign currency to appreciate.
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