Assume the current spot rate between the UK and the U.S. is 0.798 per $1, the expected inflation rate in the U.S. is 1.59 percent,
Assume the current spot rate between the UK and the U.S. is 0.798 per $1, the expected inflation rate in the U.S. is 1.59 percent, and the expected inflation rate in the UK is 4.19 percent.
If relative purchasing power parity exists, what will the exchange rate be next year?
(answer rounded off to FOUR decimal points)
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Authors: William O. Cleverley, James O. Cleverley, Paula H. Song
7th Edition
0763789291, 978-0763789299
