Understanding the Purchasing Power Parity Model

In the context of currency exchange rates, various models exist to explain how different factors influence exchange rates over time. One of the simplest and most widely accepted models is the Purchasing Power Parity (PPP) model. This model postulates a relationship between exchange rates and the relative prices of goods in different countries.

Based on the PPP model, if the price of a basket of goods in the United States is higher than the price of the same basket of goods in the Eurozone, then, according to this model, we would expect the value of the US dollar to depreciate relative to the Euro.

Which of the following statements accurately describes the Purchasing Power Parity (PPP) model?