Question: Under the Purchasing Power Parity Theory (PPP), please explain what might happen at Point B? What may happen at Point B to move it towards

Under the Purchasing Power Parity Theory (PPP), please explain what might happen at Point B? What may happen at Point B to move it towards the Parity line? 5 4 Parity line 3 A 2 1 B Change in foreign currency relative to home currency (%) -5 -4 -3 -2 -1 1 2 4 5 -1 -2 -4 -5 Inflation differential home country relative to foreign country (%)

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