The purchasing power parity theory is a good predictor of

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The purchasing power parity theory is a long-term theory that predicts the relationship between changes in the price level and the exchange rate of two countries. It suggests that over time, the exchange rate between two countries will adjust to reflect changes in the relative price levels of those countries. The theory does not account for day-to-day fluctuations or short-term factors, such as interest rate differentials or intervention in exchange markets.

The Purchasing Power Parity Theory Is a Good Predictor of