What do we mean by "relative purchasing power parity"? Describe the Balassa-Samuelson critique of this doctrine:...

What do we mean by "relative purchasing power parity"? Describe the Balassa-Samuelson critique of this doctrine: present this critique algebraically,

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Expansion of traditional Purchasing Power Parity which is known as Relative Purchasing Power Parity it includes the changes which occurs overtime with inflation.It is the dynamic version of the static version( Purchasing Power Parity) Power of money which is purchasing power , is the power can be expressed by the good and services it can purchase or buy and which can get affected by inflation resulting it to be reduced.

It also states that inflation rate of two country and exchange rate of two country , will be equal overtime.

Relative Purchasing Power Parity mostly used in the long run and Purchasing Power Parity is needed mostly in the short run.

2nd part is down below

Rahul Sunny answered 2 years ago

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What do we mean by "relative purchasing power parity"? Describe the Balassa-Samuelson critique of this doctrine:...

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