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Can I simply type PPP or IRP in the exam answers?
Also, is the following relationship to estimate exchange rate correct?
Home or base currency value =
Home country*(1+home inflation rate) ÷ foreign country*(1+foreign inflation rate)Are you meaning if you can just type the abbreviations? If so, then yes you can.
As far as forecasting a future exchange rate it concerned then you use the formula provided in the exam and my free lectures working through Chapter 22 of our free lecture notes explain how to use the formula, with examples.
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