Purchasing power parity is better at predicting short-term exchange rates (less than 12 months) than long-term rates.

Name: Purchasing power parity is better at predicting short-term exchange rates (less than 12 months) than long-term rates.
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Question

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Purchasing power parity (PPP) is generally more effective at predicting long-term exchange rate movements rather than short-term fluctuations, as short-term rates are influenced by factors like interest rates and market speculation.

Purchasing Power Parity Is Better at Predicting Short-Term Exchange Rates