M07_EITE3518_13E_IM_C07 - Chapter 7 International Parity Conditions Questions 7-1 Purchasing Power Parity Define the following terms a b Absolute

M07_EITE3518_13E_IM_C07 - Chapter 7 International Parity...

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29 Chapter 7 International Parity Conditions Questions 7-1. Purchasing Power Parity. Define the following terms:a. The law of one price. b. Absolute purchasing power parity c. Relative purchasing power parity 7-2. Nominal Effective Exchange Rate Index. Explain how a nominal effective exchange rate index is constructed.

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