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QUESTION 15 Under purchasing power parity, the future spot exchange rate is a function of the initial spot rate in equilibrium and: a.the income differential.

QUESTION 15 Under purchasing power parity, the future spot exchange rate is a function of the initial spot rate in equilibrium and:

a.the income differential.

b.the forward discount or premium.

c.the inflation differential.

d.None of these are correct.

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