What is meant by purchasing power parity and arbitrage


Problem

Highlight the effect of how government sponsored fiscal policy ("crowding out effect"), monetary policy (Federal Reserve) and trade policy can directly influence a CFO's perspective on interest rates, inflation or deflation, exchange rates and capital spending either domestically or internationally? What is meant by purchasing power parity and arbitrage and how could that influence a CFO's decision to either make purchases and / or invest overseas?

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Corporate Finance: What is meant by purchasing power parity and arbitrage
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