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The following graph shows the PPP line in blue along with several hypothetical points, A through E, that represent combinations of inflatic differentials and associated

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The following graph shows the PPP line in blue along with several hypothetical points, A through E, that represent combinations of inflatic differentials and associated percentage changes in the spot rate of the foreign currency. Use the graph to fill in the table that follows. For each point on the previous graph, use the table to indicate whether purchasing power parity exists, or whether purchasing power is m favorable for foreign or domestic products. Note: Assume there are no transaction costs

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