Define the transactions costs and nontraded goods

Reference no: EM131479904

Question: Describe how each of the following factors might explain why PPP is a better guide for exchange rate movements in the long run versus the short run:

(i) transactions costs,

(ii) nontraded goods,

(iii) imperfect competition,

(iv) price stickiness.

As markets become increasingly integrated, do you suspect PPP will become a more useful guide in the future? Why or why not?

Reference no: EM131479904

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