What are the main factors affecting the relative prices of goods?

What are the main factors affecting the relative prices of goods? Such effect can induce

changes in exchange rates and deviations from purchasing power parity. Do you agree? These

changes may create a correlation between the exchange rate and the terms of trade. Can

governments engage in foreign exchange market operations to exploit this correlation and

affect the terms of trade?

Discuss the above with relevant examples and research.

1500 words