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Suppose the exchange rate between the U.S. dollar and the Japanese yen is initially 90/$. According to purchasing-power parity, if the price of traded goods
Suppose the exchange rate between the U.S. dollar and the Japanese yen is initially 90/$. According to purchasing-power parity, if the price of traded goods rises by 5 percent in the United States and by 15 percent in Japan,what will be the expected exchange rate?
A. 108/$
B. 90/$
C. 72/$
D. 81/$
E. 99/$
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