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What is Absolute Purchasing Power Parity (APPP) and what is Relative Purchasing Power Parity (RPPP)?...

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Accounting

What is Absolute Purchasing Power Parity (APPP) and what is Relative Purchasing Power Parity (RPPP)? Now, consider the following: The inflation rate in the US is projected at 5% per year for the next 4 years. The Australian inflation rate is projected to be 3% during that time. Currently, the spot rate is Australian Dollars, (AD$ 1.35/1US$) - European Quote. Based on relative Purchasing Power Parity (RPPP), what is the expected exchange rate in 4 years for the Australian Dollar (AD) vs. the US Dollar?

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