Question: Cornucopia experiences 15% inflation and its trading partner Plantopia, does not. Assuming that PPP holds, what happens to Cornucopia's real exchange rate? It does not

Cornucopia experiences 15% inflation and its trading partner Plantopia, does not. Assuming that PPP holds, what happens to Cornucopia's real exchange rate?

It does not change.

It appreciates by 15%.

It becomes negative.

It depreciates by 15%.

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