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What is Relative Purchasing Power Parity Explained about?

The document discusses factors that determine exchange rates in the long run, including purchasing power parity (PPP) and monetary policy. PPP states that exchange rates adjust so that the price of tradable goods is equalized across countries. There are two versions of PPP - strict PPP where prices are exactly equal, and relative PPP where inflation differentials affect exchange rates. Monetary policy also impacts exchange rates, as a country

Author

Fazliddin Makhmudaliev

Language

EN