Question: (b) Which theory can better explain the relationship between the inflation rate and exchange rate? Absolute purchasing power parity (APPP) or relative purchasing power parity

(b) Which theory can better explain the relationship between the inflation

(b) Which theory can better explain the relationship between the inflation rate and exchange rate? Absolute purchasing power parity (APPP) or relative purchasing power parity (RPPP)? (8 marks)

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