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Given the following information, would the change in the exchange rate from e 0 to e 1 create economic exposure for a $-based firm? Explain
Given the following information, would the change in the exchange rate from e0 to e1create economic exposure for a $-based firm?
Explain your answer.
U.S. inflation is 0%; German inflation is 10%; e0=$1.45/; e1=$1.38/.
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