Suppose that the United follows an expansionary monetary policy, which increases prices. Suppose that the Canadian gover

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Suppose that the United follows an expansionary monetary
policy,
which increases prices. Suppose that the Canadian government
too
adopts an expansionary monetary policy that generates as much
inflation as the United States does. In this case, purchasing-power
parity
implies that the U.S. dollar should depreciate against the Canadian
dollar.