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Assume that the Canadian dollar's spot rate is $.90 and that the Canadian and U.S. inflation rates are similar. Then assume that Canada experiences 4.1%
Assume that the Canadian dollar's spot rate is $.90 and that the Canadian and U.S. inflation rates are similar. Then assume that Canada experiences 4.1% inflation, while the United States experiences 3% inflation. According to PPP, the new value of the Canadian dollar after it adjusts to the inflationary changes will be $
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