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Suppose purchasing power parity holds. In the US, the money supply grew at 3%, Real GDP at 2% and velocity grew at 3%. In Brazil,
Suppose purchasing power parity holds. In the US, the money supply grew at 3%, Real GDP at 2% and velocity grew at 3%. In Brazil, the Money supply grew at 5%, real GDP grew at 0% and velocity fell by 1%. Then the US dollar
a. | neither appreciated nor depreciated relative to the Brazilian Real | |
b. | appreciated by 1% relative to the Brazilian Real | |
c. | appreciated by 3% relative to the Brazilian Real | |
d. | none of the above |
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