The following information shows: 1) CPIs for Thailand and the U.S. at the end of years 20X1 and 20X3 and 2) the exchange rates between USD and THB for the same periods

CPI_TH,20X1 = 140.0 CPI_TH,20X3 = 147.0

CPI_US,20X1 = 120.0 CPI_US,20X3 = 130.8

S^B/$_20X1 = 30.2500/$ S^B/$_20X3 = 31.0000/$

1.1. Using on the exchange rate in 20X1 and CPIs in 20X1 and 20X3, what should be the expected spot exchange rate in 20X3 based on relative PPP? Show your calculation and answer to 4 decimal places .

Q-2 Using 20X1 as the base year, calculate the real exchange rate for USD in 20X3. Show your calculation and Comment on the effect of movement in exchange rate and price levels on relative price competitiveness of manufacturers from the 2 nations