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the current spot rate between australian dollars (AUD) and U.S dollars (USD) is S(AUD/USD)= 0.7900. the expected inflation rate for the next year will be
the current spot rate between australian dollars (AUD) and U.S dollars (USD) is S(AUD/USD)= 0.7900. the expected inflation rate for the next year will be 3% in the united states and 2% in Australia
a. According to the purchasing power parity, what should be the spot rate S(AUD/USD) one year from now? show your calculations please
b. assume one year from now it turns out that the us dollar depreciate by 3% against the Australian dollars. what does it imply in terms of the competitiveness in the us export market ? Explain
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