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Assume, that the U.S. dollar and the Japanese Yen are initially in equilibrium. However, the inflation rate in Japan is 2.5% and the inflation
Assume, that the U.S. dollar and the Japanese Yen are initially in equilibrium. However, the inflation rate in Japan is 2.5% and the inflation rate in the U.S. is 4.1%. Using the relative purchasing power parity equation, which of the following is true? OA. The JPY will depreciate -1.54% relative to the USD OB. The USD will appreciate 1.54% relative to the JPY OC. The USD will depreciate -1.54% relative to the JPY D. The USD will depreciate -2.54% relative to the JPY
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