Suppose other factors remaining constant, PPP determines the change in exchange rate between the pair of UK and US currencies. Suppose you (as UK MNC) export your product to USA and price in USD. You maintain a certain competitive advantage in pricing over local competitors in US. Over the coming year, the USD is expected to depreciate by 5% against the . Also suppose the UK's expected inflation is 2%. Based on this information (you can use the approximate relationship), determine the following: The expected inflation in USA (5 marks) If your competitors in USA increase the price of their product (the same product you export) in line with expected inflation in USA, then by how much (in percentage) can you increase the price of your export denominated in USD without losing any customer or ii. sales of your products. (5 marks) Suppose other factors remaining constant, PPP determines the change in exchange rate between the pair of UK and US currencies. Suppose you (as UK MNC) export your product to USA and price in USD. You maintain a certain competitive advantage in pricing over local competitors in US. Over the coming year, the USD is expected to depreciate by 5% against the . Also suppose the UK's expected inflation is 2%. Based on this information (you can use the approximate relationship), determine the following: The expected inflation in USA (5 marks) If your competitors in USA increase the price of their product (the same product you export) in line with expected inflation in USA, then by how much (in percentage) can you increase the price of your export denominated in USD without losing any customer or ii. sales of your products