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1. Relative Purchasing Power Parity (PPP: Consider relative PPP and remember the consumer price index (CPI) provides the price level in a country at any

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1. Relative Purchasing Power Parity (PPP: Consider relative PPP and remember the consumer price index (CPI) provides the price level in a country at any point in time. Assume CPI in US is 170 in 2010 and 220 in 2015, and CPI in Canada is 165 in 2010 and 200 in 2015. If the spot exchange rate was 0.7165 USD/CAD in 2010, what will it be in 2015 if Relative PPP holds? (6 points)

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