What is the law of one price? and how the law of one price derives the theory of purchasing power parity. Now if the purchasing power parity hold the exchange rate can be determined by the following equation E=PP This is called the long-run exchange rate model based on PPP. Then explain what will happen the Korean(home contry) won/dollar exchange rate if the US(foreign country) increase a permanent increase in the growth rate of money supply, Based on the fisher effect as RR= Please show the time paths of the Korean won/dollar exchagne rate