Under relative purchasing-power parity,
A. the exchange rate equals the ratio of price indexes in two countries.
B. interest-rate parity holds.
C. absolute purchasing-power parity also holds.
D. a currency depreciates relative to another currency by the amount by which the inflation rate is higher in the first country than in the second country.
Answer: D
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Fill in the blank(s) with the appropriate word(s).
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