Under PPP,

A.a rise in a country’s expected inflation rate will eventually cause a more-than proportional rise in the interest rate that depositors of its currency offer in order to accommodate for the higher

B.a fall in a country’s expected inflation rate will eventually cause an equal rise in the interest rate that depositors of its currency

C.a rise in a country’s expected inflation rate will eventually cause an equal rise in the interest rate that depositors of its currency

D.a rise in a country’s expected inflation rate will eventually cause a less than proportional rise in the interest rate that depositors of its currency offer to accommodate the rise in expected

E.None of the above statements is true.

Answer: C