Question
The formula for absolute purchasing power parity sets the domestic price of a good (in $) equal to the spot exchange rate ($/FC) multiplied by
The formula for absolute purchasing power parity sets the domestic price of a good (in $) equal to the spot exchange rate ($/FC) multiplied by the foreign price of a good (in FC). For example, if the exchange rate is $2/L and the foreign price of a t-shirt is L5,
then what should the domestic price sell for?
What if the value is different than this?
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Financial Informatics An Information Based Approach To Asset Pricing
Authors: Dorje C Brody, Lane Palmer Hughston, Andrea Macrina
1st Edition
9811246483, 978-9811246487
