Question: What is the purchasing power parity theory? Multiple choice question. Changes in spot rates over time are related to the inflation rates in the two

What is the purchasing power parity theory?
Multiple choice question.
Changes in spot rates over time are related to the inflation rates in the two respective countries
Forward rates differ from spot rates due to differences in inflation rates
Spot rates are unaffected by inflation rates.
Forward rates adjust as needed to maintain the purchasing power of a currency.

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