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120 yen. 5) Suppose you learn that the current exchange rate for the Japanese Yen is $1 = (10p) a. If you expect Japanese monetary
120 yen. 5) Suppose you learn that the current exchange rate for the Japanese Yen is $1 = (10p) a. If you expect Japanese monetary growth to be a total of 25% larger over the next ten years than US monetary growth, what is your best guess as to the exchange rate ten years from now? What theory underlies your prediction? Explain why we apply this theory here over a long run period, like 10 years, rather than over a short period, say less than a year
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