Purchasing Power Parity and Interest Rate Parity Theories
Purchasing Power Parity and Interest Rate Parity Theories: BUSN601 discussion, Fortunately, the theories of both purchasing power parity and interest rate parity do not have any problems. Do you agree with this statement? In 250 words, defend your position.
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I disagree with the statement that purchasing power parity and interest rate parity theories do not have any problems. Purchasing power parity theory postulates that the price of a similar basket of goods in two different countries determines the foreign exchange rates. According to Al-Zyoud (2015), in the long-run, the price of a similar basket of goods should be the same across countries. The theory also holds that a change in the price of a similar basket of goods in a country, for example, due to…
(300 words)