Your book describes the increase in the money supply as being analogous to giving people more money. If the output of goods and services is not growing at a similar rate, inflation will eventually occur. According to PPP Theory, what will happen to the U.S. dollar? Why? Explain your answer in a well-constructed and persuasive manner.
Book Reading: The Purchasing Power Parity (PPP) theory is defined as the change in GDP that reflects the changes in process of the baskets of goods (Hill, 2015).
Hill, C. W. L. (2015). International business: Competing in the global marketplace (10th ed.). New York, NY: McGraw-Hill. ISBN: 978-0-07-811277-5