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Assume, the initial exchange rate is $1.20Cdn for $1.00US. After 10 years, the United States price level has risen from 100 to 200, and the

Assume, the initial exchange rate is $1.20Cdn for $1.00US. After 10 years, the United States price level has risen from 100 to 200, and the Canadian price level has risen from 100 to 175.

i) What was the ination rate in each country?

ii) What nominal exchange rate would preserve the initial real exchange rate?

iii) Which country's currency depreciated?

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