The empirical evidence on purchasing power parity over the long run seems to point out that:
A. the theory of purchasing power parity cannot explain long-run changes in exchange rates.
B. the higher a country's inflation rate the greater is the depreciation in the country's currency.
C. the higher a country's inflation rate, the greater is the appreciation in the country's currency.
D. there isn't any clear link between inflation rates and exchange rates.
Answer: B
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