A less restrictive form of purchasing power parity is:

Question

Quizplus · Accepted Answer

Relative purchasing power parity allows for slight deviations in exchange rates based on differences in inflation rates between countries. It suggests that over the long run, changes in the exchange rate should reflect changes in the relative inflation rates. This is a less restrictive form of PPP compared to absolute PPP, which assumes that the same basket of goods should cost the same across countries, and omnipotent PPP, which assumes that all goods and services are perfectly tradable across borders.

A Less Restrictive Form of Purchasing Power Parity Is