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Q5. (5 pts). Suppose the current spot rate is $ 1.55/ on the first of January. By year's end, the US CPI is expected to
Q5.(5 pts).Suppose the current spot rate is $ 1.55/ on the first of January. By year's end, the US CPI is expected to climb from 144 to 150 and the UK CPI is expected to climb from 120 to 130. According to PPP, what is the expected spot rate on December 31?(Show your calculations!)
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