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According to the purchasing power parity theory the value of a currency should remain constant in terms of what it can buy in different countries of?

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Related questions

According to the theory of purchasing power parity (PPP), what will happen to the value of the dollar (against foreign currencies) if the U.S. price level doubles and price levels in other countries remain constant? Why is the theory more suitable to analyzing events in the long run?

  1. Sometimes, analysts use the price of specific products in different locations to compare currency valuation and purchasing power. For example, the Big Mac Index compares the purchasing power parity of many countries based on the price of a Big Mac. Locate the latest edition of this index that is accessible. Identify the five countries and the currencies with the lowest purchasing power parity according to this classification. Which currencies, if any, are overvalued?

If the price measured in a common currency of a particular basket of goods is 13 percent higher in the U.S than it is in the United Kingdom, which country's currency is overvalued, according to the theory of purchasing power parity? Explain.

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