What is the theory of purchasing power parity? Does the theory successfully explain all long-run exchange rate movements? What are some reasons that it might not always explain such movements? How does the PPP impact customers and businesses differently?
You decide to work in Japan for the next ten years, accumulate some savings, then move back to the United States and convert your savings from yen to dollars. At the time of your move, economists predict that consumers in the United States have reignited their love of Japanese products, especially hoverboards and 3D televisions, and expect this strong preference for Japanese products will continue for the next decade. Should these predictions encourage or discourage you from working and saving in Japan Why Should you reconsider your move and/or reconsider it in the future?