If trade barriers were completely removed and there were no government intervention between the United States and China, would the Purchasing Power Parity (PPP )be more likely to hold between the two countries? What about the International Fischer Effect (IFE)? Would the IFE be more likely to hold between the two countries? Explain. Consider the current situation for both countries with trade barriers as well as government intervention. How accurately do you think the PPP and IFE provide the exchange rate forecast?
"elaborate whether PPP and IFE will hold if the government intervention and trade barriers are removed"
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