Prices in both the U.S. and China rise, but prices in China increase by a larger percentage. According to purchasing-power parity, the U.S. dollar
a. gains value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.
b. gains value in terms of the domestic goods and services it can buy, but loses value in terms of the Chinese currency it can buy.
c. loses value in terms of the domestic goods and services it can buy, but gains value in terms of the Chinese currency it can buy.
d. loses value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.
c
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