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The Federal Reserve sets the target growth rate of money (M1) at 2% from now until the end of this year, while the European Central

The Federal Reserve sets the target growth rate of money (M1) at 2% from now until the end of this year, while the European Central Bank (ECB) sets its target growth rate of money at 7% during the same period. The current spot rate is $1.12 per euro. What do you expect will be the spot rate at the end of this year? Explain why. Which theory do you apply for your forecasting?

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