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Suppose that the expected real interest rate in the United States is 3 percent per year while that in Europe is 5 percent per year.

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Suppose that the expected real interest rate in the United States is 3 percent per year while that in Europe is 5 percent per year. What do you expect to happen to the real dollar/euro exchange rate (number of USD per Euro) over the next year? Explain and justify your answer using the theories

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