3. The table below gives macroeconomic data for the three countries. Use the information from the following table to answer this question Gross Domestic Product Forecast Otr Industrial Forecast Production Recent Otr Latest Qur 2021 20216 Country Australia 4.3% 4.1% 3.5% 1.9% 3.8% -1.2% 3.8% 4.6% 43% 1,6% Japan United States 2.0% 1.9% 1.9% Consumer Prices Country Australia Japan United States Year Ago 4.0% 0.9% Latest 2.1% -0.2% 2.8% Forecast 20216 0.0% 2.4% 1.8% Interest Rates 3-month 1-yr Govt Latest 6.90% 0.73% 1.56% 4.55% 4.72% Trade Balance Last 12 mes (billion ) -13.0 Year Ago Country Australia Japan United States Current Account Current Units (per USS Last 12 mos Forecast 07 (billions) % of GDP) Oct 17th -547.0 -5.7% 1.21 1.33 $197.5 171 119 -5793.2 -5.6% 1.00 1.00 98.1 -810.7 (i) Assuming purchasing power parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following cross rates: (3.75 marks) (a) Japanese yen US dollar in 1 year (b) Australian dollar/US dollar in 1 year (c) Japanese yen Australian dollar in 1 year (ii) Assuming International Fisher applies to the coming year, forecast the following future spot exchange rates using the government bond rates for the respective country currencies: (3.75 marks) (a) Japanese yen US dollar in 1 year (b) Australian dollar/US dollar in 1 year (c) Japanese yen/Australian dollar in 1 year 3. The table below gives macroeconomic data for the three countries. Use the information from the following table to answer this question Gross Domestic Product Forecast Otr Industrial Forecast Production Recent Otr Latest Qur 2021 20216 Country Australia 4.3% 4.1% 3.5% 1.9% 3.8% -1.2% 3.8% 4.6% 43% 1,6% Japan United States 2.0% 1.9% 1.9% Consumer Prices Country Australia Japan United States Year Ago 4.0% 0.9% Latest 2.1% -0.2% 2.8% Forecast 20216 0.0% 2.4% 1.8% Interest Rates 3-month 1-yr Govt Latest 6.90% 0.73% 1.56% 4.55% 4.72% Trade Balance Last 12 mes (billion ) -13.0 Year Ago Country Australia Japan United States Current Account Current Units (per USS Last 12 mos Forecast 07 (billions) % of GDP) Oct 17th -547.0 -5.7% 1.21 1.33 $197.5 171 119 -5793.2 -5.6% 1.00 1.00 98.1 -810.7 (i) Assuming purchasing power parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following cross rates: (3.75 marks) (a) Japanese yen US dollar in 1 year (b) Australian dollar/US dollar in 1 year (c) Japanese yen Australian dollar in 1 year (ii) Assuming International Fisher applies to the coming year, forecast the following future spot exchange rates using the government bond rates for the respective country currencies: (3.75 marks) (a) Japanese yen US dollar in 1 year (b) Australian dollar/US dollar in 1 year (c) Japanese yen/Australian dollar in 1 year
