ONEQUESTIONS THREE SENTENCES 1. iF THE jAPANESE PRISES RISE BY 5 % RELATIVE TO THE PRICELEVEL IN THE UNITED STATES, WHAT DOES THE THEORY OF PURCHASING POWER PARITY WILL HAPPEN TO THE VALUE OF THE...

RELATIVE TO THE PRICELEVEL IN THE UNITED STATES, WHAT DOES THE
THEORY OF PURCHASING POWER PARITY WILL HAPPEN TO THE VALUE OF THE
JAPANESE YEN IN TERMS OF DOLLARS
Ans.
Purchasing power parity is a concept which asks how much money is required to buy the same
bundle of goods and services in two countries. This helps to calculate the foreign exchange rate
for the two countries. Another interpretation of this concept compares the price levels across two
countries. There is...