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Suppose Russia's Inflation Rate Is 200% Over One Year but the Inflation

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Essay

Suppose Russia's inflation rate is 200% over one year but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swiss franc's exchange rate against the Russian ruble?


Definitions:

Incongruous

Incongruous refers to something that is not in harmony or keeping with the surroundings or other aspects of something, often leading to a sense of discrepancy or inconsistency.

Distorted

The term distorted describes something that has been twisted out of its original, true, or natural shape, often leading to a misrepresentation of reality.

Inadequate

Lacking the quality or quantity required; insufficient for a purpose.

Clarification

The act of making a statement or situation less confused and more comprehensible.

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