Question: What is the purchasing power parity theory? Multiple choice question. Forward rates differ from spot rates due to differences in inflation rates Forward rates adjust

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

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