Assume that the inflation rate in the U.S. and japan are 4% and 2% , respectively and that the current spot rate is $.0083333 per Japanese yen or 120 Japanesse yen per one U.S. dollar. How much should the U.S. dollar depreciate in order to maintain purchasing power parity?© BrainMass Inc. brainmass.com March 4, 2021, 5:49 pm ad1c9bdddf
Relative PPP refers to rates of changes of price levels, that is, inflation rates. This ...
Relative PPP is demonstrated.