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Absolute purchasing power parity-relative purchasing power

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Reference no: EM132691123

The Law of One Price (LOOP), Absolute Purchasing Power Parity and Relative Purchasing Power Parity (PPP) all offer slightly different explanations of the behaviour of the exchange rate. Discuss. Why might the actual exchange rates that you observe in the FX markets differ from those implied by LOOP or Absolute PPP?

Reference no: EM132691123

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