Could fluctuations in the real exchange rate cause deviations from absolute purchasing power parity? Why?

What will be an ideal response?

Answer: The real exchange rate, say, of the dollar relative to the euro, is denoted RS(t,$/€). It is defined to be the nominal exchange rate multiplied by the ratio of the price levels:
RS(t,$/€) = (S(t,$/€) x P(t,€)) / P(t,$)

Notice that the real exchange rate would be 1 if absolute purchasing power parity held because the nominal exchange rate, S(t,$/€), would equal the ratio of the two price levels, P(t,$)/P(t,€). Similarly, if absolute PPP is violated, the real exchange rate is not equal to 1. Thus, fluctuations in the deviations from absolute PPP are fluctuations in the real exchange rate.