For each point on the previous graph, use the table to indicate whether purchasing power parity exists, or whether purchasing power is more favorable for foreign or domestic products.

The following graph shows the PPP line in blue along with several hypothetical points, A through E, that represent combinations of inflation rate differentials and associated percentage changes in the spot rate of the foreign currency. Use the graph to fill in the table that follows. ? 7 f PPP 6 5 4 D 2 + 1 E ih-if(%) 0 + B ++ 40, -4 -5 -8 -7 -1 -2 4 5 7 -6 -5 4 3 1 2 3 Change in Foreign Currency Spot Rate (%) For each point on the previous graph, use the table to indicate whether purchasing power parity exists, or whether purchasing power is more favorable for foreign or domestic products. Note: Assume there are no transaction costs. Purchasing Power More Favorable for Foreign Products Purchasing Power Parity (PPP) Purchasing Power More Favorable for Domestic Products Points Point A Point B Point C Point D OO OO Point E O The following graph shows the PPP line in blue along with several hypothetical points, A through E, that represent combinations of inflation rate differentials and associated percentage changes in the spot rate of the foreign currency. Use the graph to fill in the table that follows. ? 7 f PPP 6 5 4 D 2 + 1 E ih-if(%) 0 + B ++ 40, -4 -5 -8 -7 -1 -2 4 5 7 -6 -5 4 3 1 2 3 Change in Foreign Currency Spot Rate (%) For each point on the previous graph, use the table to indicate whether purchasing power parity exists, or whether purchasing power is more favorable for foreign or domestic products. Note: Assume there are no transaction costs. Purchasing Power More Favorable for Foreign Products Purchasing Power Parity (PPP) Purchasing Power More Favorable for Domestic Products Points Point A Point B Point C Point D OO OO Point E O