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Purchasing Parity

May 15, 2019 by Investor

Purchasing Parity
It is described as the theory stating that the overseas exchange rate among the two different countries should be equivalent to the ratio among the respective costs of a group of items. When this takes place, the rate of exchange is regarded to be in steadiness. The theory depends on the single costlaw that says that a product should have the similar cost in various countries. Obviously,it does not take costs of transaction and transportation into account.

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