Prices in both the U.S.and China rise,but prices in China increase by a larger percentage.According to purchasing-power parity,the U.S.dollar
A)gains value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.
B)gains value in terms of the domestic goods and services it can buy,but loses value in terms of the Chinese currency it can buy.
C)loses value in terms of the domestic goods and services it can buy,but gains value in terms of the Chinese currency it can buy.
D)loses value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.

Question

Quizplus · Accepted Answer

According to purchasing-power parity, if prices in China rise by a larger percentage than in the U.S., the U.S. dollar gains value relative to the Chinese currency, as it can buy more Chinese goods. However, it loses value domestically as prices rise.

Prices in Both the U