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Purchasing Power Parity: Suppose the rate of inflation in Mexico will run about 3 percent higher than the U.S. inflation rate over the next several

Purchasing Power Parity: Suppose the rate of inflation in Mexico will run about 3 percent

higher than the U.S. inflation rate over the next several years. All other things being the same,

what will happen to the Mexican peso versus dollar exchange rate? What relationship are you

relying on in answering?

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