Explain the law of one price in the perspective of the following: a) Purchasing power parity b) Interest rate parity

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A: Ratio is the relation between two different quantities obtained after dividing one by another.

Q: What is purchasing power parity?

A: Purchasing power parity (PPP): It is one well known macroeconomic investigation metric for…

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Q: Interest rate parity; purchasing power parity

A: Both defined in next step

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Q: Define the law of one price carefully, noting its fundamentals assumptions. Why are these…

A: The question is based on the concept of One price theory used in purchase power parity.

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Q: b. What i

A: Given as,

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A:

Q: What is meant by purchasing power parity?

A: Purchasing power parity It is a measuring of the prices in various other countries that utilizes the…

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Q: Explain purchasing power parity

A: The formula to compute purchasing power parity:

Q: Discuss the following models in relation to purchasing power parity.

A: Comparative rates of inflation in different countries are the factors influencing the exchange rate.…

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Q: What is purchasing power parity? How might afirm use this concept in its operations?

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A: Purchasing Power Parity (PPP) is a theory of exchange rate determination. Purchasing power parity is…

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