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Sulsa Inc. uses fundamental forecasting. Using regression analysis, it has determined the following equation for the euro eurot = bo + bINF:-1+ b2INC - 1

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Sulsa Inc. uses fundamental forecasting. Using regression analysis, it has determined the following equation for the euro eurot = bo + bINF:-1+ b2INC - 1 = .005 + 9INFt -1 +1.1INC - 1 The most recent quarterly percentage change in the inflation differential between the U.S. and Europe was 2 percent, while the most recent quarterly percentage change in the income growth differential between the U.S. and Europe was - 1 percent. Based on this information, the forecast for the euro is a(n) of %. O appreciation: 3.4 O depreciation; 3.4 O appreciation: 0.7 O appreciation: 12

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