The exchange rate market

1)Explain the reasons of why the purchasing power parity does not exist in the short run.

2)Explain the relation between money supply, the interest rate, the nominal exchange rate, and inflation in the long run, using quantity theory of money, Fisher equation as well as purchasing power parity.

3)Identify and explain the major factors that can cause a shift in aggregate demand curve as well as aggregate supply. (Explain the reasons why curves shift)

Answer rating: 100% (QA)

1 The reasons why the purchasing power parity does not exist in the short run are i The Purchasing P... View the full answer