Standard consumption bundle currently sells for $25,000 in the U.S and CAD30,000 in Canada. The current oxchange rate in CAD1 IUSD. Annual inflation rate is expected to be 3% is the U.S. and 5% in. Cannda, (1) Which currency if expected to apprsciate over time? USD (2) Calculate the % price change of CAD in the next year based on PPP. USIRBIRC=5%1,11,05/1,03=1,12;((1,12=1,1)),1) (3) Forecast S:(CADUSD), the future spot rate in 2 years, with PPP (4) Assume the real interest rate is the same in U.S. and Canada and the nominal annual interest rate is 23 in the U.S. Calculate the nominal annual interent rate in Canada based on FE (5) What would be the % price change of USD that leads to no change to coneumers' consumption mix? (6) Assume USD appreciates 2.5% against CAD in the next year. Discuss the followings with calculation. (a) The impact on USD's purchasing power in U.S next year. (b) The impact on USD's purchasine power of Canadian goods in the next year: Standard consumption bundle currently sells for $25,000 in the U.S and CAD30,000 in Canada. The current oxchange rate in CAD1 IUSD. Annual inflation rate is expected to be 3% is the U.S. and 5% in. Cannda, (1) Which currency if expected to apprsciate over time? USD (2) Calculate the % price change of CAD in the next year based on PPP. USIRBIRC=5%1,11,05/1,03=1,12;((1,12=1,1)),1) (3) Forecast S:(CADUSD), the future spot rate in 2 years, with PPP (4) Assume the real interest rate is the same in U.S. and Canada and the nominal annual interest rate is 23 in the U.S. Calculate the nominal annual interent rate in Canada based on FE (5) What would be the % price change of USD that leads to no change to coneumers' consumption mix? (6) Assume USD appreciates 2.5% against CAD in the next year. Discuss the followings with calculation. (a) The impact on USD's purchasing power in U.S next year. (b) The impact on USD's purchasine power of Canadian goods in the next year