2. If an item costs $5 in the U.S., assuming purchasing power parity with current exchange rates of $1.25/, what is the price of the item in Germany? If, over the next year, inflation is 6% in Germany and 10% in the United States, what would be the exchange rate of US dollars for Euro with inflation? (7 points) 2. If an item costs $5 in the U.S., assuming purchasing power parity with current exchange rates of $1.25/, what is the price of the item in Germany? If, over the next year, inflation is 6% in Germany and 10% in the United States, what would be the exchange rate of US dollars for Euro with inflation? (7 points)