NO.PZ2020012102000011
问题如下：
Fap is a small country whose currency is the Fip. Three years ago, the exchange rate was considered to be reflecting purchasing power parity (PPP). Since then, the country’s inflation has exceeded inflation in the other countries by about 5% per annum. The Fip exchange rate, however, remained broadly unchanged.
What would you have expected the Fip exchange rate to show if PPP prevailed? Are Fips over or undervalued, according to PPP?
选项：
解释：
According to PPP, to offset the effect of the higher inflation in Fap, the Fip should have depreciated against the other currencies by approximately the difference between Fap inflation and that in the other countries. According to PPP, Fip is overvalued.
解析：根据购买力平价理论，为了抵消Fap中较高的通货膨胀的影响，Fip应该对其他货币贬值大约是Fap通货膨胀与其他国家之间的差额。根据购买力平价理论，Fip被高估了。
- The exchange rate will decrease and Fips are overvalued.
- PPP holds means the changes in nominated exchange rate is equal to the difference in expected inflation between two countries. One country with higher nominated inflation will experience a currency deppreciate.
- Since Fap's inflation has exceeded inflation in the other countries by about 5% per annum,Fips should be deppreciate by 5%.
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