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This question is about Relative Purchasing Power Parity: I am confusing about a sentence: If local currency has higher inflation rate than other major trade
This question is about Relative Purchasing Power Parity:
I am confusing about a sentence: If local currency has higher inflation rate than other major trade partners, but local currency does not depreciate to the same extent (Let's say Inflation rate=4%, but local currency only depreciate for 2%). Then, local goods and services exported will become less competitive.
Why exported goods and services is becoming less competitive?
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