Question

If relative PPP holds, does it imply absolute PPP?

Answer 1

Absolute PPP implies that price of same good in different countries should be same when compared to same currency while relative PPP means that % change in exchange rate between countries should be same as %change in price of the same good between those countries. Absolute PPP is measured at a point of time while relative PPP is measured during a period of time. If the %change in exchange rate is same as %change in price, it is not mandatory that price of these goods will be same when compared to single currency which makes this statement incorrect.