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Economic Assume the absolute PPP (purchasing power parity) holds? which is: E{$/) : 13$ /P {US dollar vs UK pound) holds for anyr given period

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Economic

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Assume the absolute PPP (purchasing power parity) holds? which is: E{$/) : 13$ /P {US dollar vs UK pound) holds for anyr given period t or t+1. Use the decomposition equations on slides 35 to show that the rate of deprecation of dollar equals to the ination differential between the US and UK. {show all steps!)

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