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Question 19 2 pts Assume purchasing power parity holds now and in a year. Identical goods (with no transportation costs) cost $100 (USD) in the
Question 19 2 pts Assume purchasing power parity holds now and in a year. Identical goods (with no transportation costs) cost $100 (USD) in the United States and 2,000 pesos (MXP) in Mexico. In the next year, the Mexican economy experiences a 10% inflation rate and the U.S. economy experiences a 5% inflation rate. Which of the following is true about the MXP:USD exchange rate: The original exchange rate was 20:1 and did not change a year later The original exchange rate was 20:1 and moved to 20.95:1 The original exchange rate was 10:1 and moved to 9.54:1 The original exchange rate was 10:1 and moved to 10.48:1
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