A. Purchasing power parity states that countries with high inflation rates tend to have depreciating currencies. Can you explain why? B. Why should the discovery of a natural resource, say oil, be...

depreciating currencies. Can you explain why?

B. Why should the discovery of a natural resource, say oil, be expected to lead to a strengthening of a country’s currency? What effect would you expect such an appreciation to have on the oil-producing country’s:

(a) manufacturing sector?

(b) exporters?

(c) consumers?