Which following statement is Incorrect? By comparing the prices of identical products denominated in different currencies, we determine the "real" or PPP exchange rale that should exist if markets were efficient The relationship between the percentage change in the spot exchange rate over time and the differential between comparable interest rates in different nation capital markets is known as the international Fisher effect. If the assumptions of the absolute version of the PPP theory are relaxed a bit more, we observe what is termed relative purchasing power parity (RPPP), which holds that PPP is not particularly helpful in determining what the spot rate is today, but that the relative change in prices between two countries over a period of time determines the change in the exchange rate over that period. The theories about how exchange rate always work out to be "true" when compared to what students and practitioners observe in the real world They are central to any understanding of how multinational business is conducted and funded in the world today