Implications of purchasing power parity
Explain implications of the purchasing power parity for the operating exposure.
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In case changes of the exchange rate are matched through the inflation rate differential between the countries, competitive positions of the firms will not get distorted by the changes of exchange rate. Firms are not subjected to the operating exposure.
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Explain about the purchasing power parity, both the relative and absolute versions. List the things which results in the deviations from purchasing power parity?
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