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Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

/ Economics Mcqs, Exchange-Rate Determination / By
Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

A. appreciate by 8 percent against the yen
B. depreciate by 8 percent against the yen
C. remain at its existing exchange rate
None of the above