How is it related to the theory of purchasing power parity

Reference no: EM131304341

1. What is the law of one price? How is it related to the theory of purchasing power parity (PPP)?

2. Is PPP a theory of exchange rate determination in the long run or in the short run?

3. According to the theory of purchasing power parity, if the price level in Great Britain rises more slowly than the price level in Canada, what should happen to the exchange rate between the British pound and the Canadian dollar in the long run?

Reference no: EM131304341

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