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Suppose that exchange rate between the dollar and the peso is in equilibrium when inflation in the U.S. rises to 1.00%. At the same time,
Suppose that exchange rate between the dollar and the peso is in equilibrium when inflation in the U.S. rises to 1.00%. At the same time, inflation in Mexico is 5.00%. If the inflation rate in the U.S. is denoted as Ih and the inflation rate in Mexico is If , then which of the following expressions represents the percent change in the peso under PPP? 1+Ih1+If+1 1+If1+Ih+1 1+Ih1+If1 1+If1+Ih1 According to this formula, percentage change in the peso should be under PPP
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