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Question 7 (5 points) Saved 17. Assume a firm estimates the following equation: E=b0+ b1 INF+b2 ING. Where INFIs the inflation differential between the US

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Question 7 (5 points) Saved 17. Assume a firm estimates the following equation: E=b0+ b1 INF+b2 ING. Where INFIs the inflation differential between the US and the UK and INC is the difference in real GDP growth. E is the expected percentage change in the USD/GBP exchange rate. Further assume that INF:2% INC=1% and that bo-0.003, b1=0.8 and b2=1.2. What is the forecasted percentage change in the USD/GBP rate? 2.8% -0.20% 1.50% 1.10% 0.80%

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