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(Ch. 8) Estimating Depreciation Due to PPP. Assume that St=1.01 EURUSD. How will this spot rate adjust after one year, according to PPP, if the

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(Ch. 8) Estimating Depreciation Due to PPP. Assume that St=1.01 EURUSD. How will this spot rate adjust after one year, according to PPP, if the Eurozone is expected to experience an inflation rate of 8% while the U.S. is expected to experience an inflation rate of 6% ? (6 points) (Ch. 8) Estimating Depreciation Due to PPP. Assume that St=1.01 EURUSD. How will this spot rate adjust after one year, according to PPP, if the Eurozone is expected to experience an inflation rate of 8% while the U.S. is expected to experience an inflation rate of 6% ? (6 points)

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