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A German car now costs 50,000. The spot exchange rate is 0.7143/A$. The expected inflation rates in Australia and Germany are, respectively, 0% and 2.0%.

A German car now costs 50,000. The spot exchange rate is 0.7143/A$. The expected inflation rates in Australia and Germany are, respectively, 0% and 2.0%. A$ is the home currency.

i.Determine the Australian dollar price of that car now.

Determine the Australian dollar price of that car one year from now if there is an 80% exchange rate pass-through

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