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Purchasing Power Parity Determines the Exchange Rate in

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Purchasing power parity determines the exchange rate in


Definitions:

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction or activity in which they did not directly participate.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service.

Marginal Private Cost

The cost incurred by a firm for producing one additional unit of a good, exclusive of any external costs.

Technology Spillovers

Benefits that firms or countries obtain by imitating or learning from the innovations of others, often without incurring the cost of innovation.

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