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According to purchasing power parity, if the domestic inflation rate is ________ than that in the foreign country, the domestic currency should be ________ than that of the foreign country.
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According to purchasing power parity, if the domestic inflation rate is ________ than that in the foreign country, the domestic currency should be ________ than that of the foreign country.

User Akhi Akl
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1 Answer

18 votes
18 votes

Answer:

lower; stronger

Step-by-step explanation:

Purchasing power parity (PPP) is a theory where the exchange rates of the states that lies between the currencies should be in equilibrium

Also their purchasing power should be similar in each and every of the two countries

So as per the purchasing power parity when the inflation rate of domestic one should be less as compared to the foreign country so the domestic currency should be stronger as compared to the foreign country

User Dinshaw Raje
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3.0k points
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