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Suppose that at the beginning of 2015, the exchange rate between the Australian dollar (AD) and the U.S. dollar (USD) was 2.2 AD per USD.
Suppose that at the beginning of 2015, the exchange rate between the Australian dollar (AD) and the U.S. dollar (USD) was 2.2 AD per USD. Over the year, Australias inflation was 12% and the U.S. inflation was 4%. If purchasing power parity holds, at the end of 2015, the exchange rate should be approximately _____ USDs per AD.
0.4895 | ||
2.3913 | ||
2.8498 | ||
0.4182 |
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