The following graph plots the percentage change in the spot rate for a foreign currency along the horizontal axis, while measuring the Inflation rate differential (between a home country and a foreign country) along the vertical axis. In refers to the Inflation rate in the home country, while i refers to the inflation rate in a foreign country. On the following graph, use the blue line (circle symbol) to plot the combinations of percentage change between the foreign currency spot rate and Inflation rate differential that are consistent with purchasing power parlty (PPP). e PPP Line 3 1 -1 1 2 3 4 5 6 7 Change in Foreign Currency Spot Rate(%) The following graph shows the PPP line in blue along with several hypothetical points, A through E, that represent combinations of Inflation rate differentials and associated percentage changes in the spot rate of the foreign currency. Use the graph to fill in the table that follows. + Change in Foreign Currency Spot Rate(%) For each point on the previous graph, use the table to indicate whether purchasing power party exists, or whether purchasing power is more favorable for foreign or domestic products. Note: Assume there are no transaction costs Purchasing Power More Favorable for Foreign Products Purchasing Power Parity (PPP) Purchasing Power More Favorable for Domestic Products Points Point A O O 0 Point B a Point C O O a Point D a Point E O O O