Suppose Turkey’s inflation rate is 7% over one year and there is 1% deflation in Japan. According to relative PPP, what should happen over the year to E TL/YEN exchange rate? There will be
a- 7% depreciation of the Turkish Lira against the Yen.
b- 7% depreciation of the Turkish Lira against the Yen.
c- 8% appreciation of the Yen against the Turkish Lira
d- 6% appreciation of the Yen against the Turkish Lira