Which exchange rate theory focuses on the inflation exchange rate relationship?
A. Interest rate parity
B. International Fisher Effect
C. Purchasing power parity
D. Traditional Model
Answer: Option C
Solution(By Examveda Team)
Purchasing power parity theory focuses on the inflation exchange rate relationship. It states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.This Question Belongs to Management >> International Finance And Treasury
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