2. The current spot exchange rate is HUF250/$1.00. Long-run inflation in Hungary is estimated at 10 percent

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2. The current spot exchange rate is HUF250/$1.00. Long-run inflation in Hungary is estimated at 10 percent annually and 3 percent in the United States. If PPP is expected to hold between the two countries, what spot exchange rate should one forecast five years into the future?

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Muhammad Salman Alvi

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