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Assume S[CHF/EUR] = 1.0200, which is the ratio of the price of a basket of goods in Switzerland to the price of the same basket
Assume S[CHF/EUR] = 1.0200, which is the ratio of the price of a basket of goods in Switzerland to the price of the same basket of goods in the Eurozone. Under absolute PPP, if inflation in Switzerland is 1% over the next six months, while inflation in the Eurozone is 1.5%, the implied CHF/EUR exchange rate will be closest to?
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