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The inflation rate in the U.k. is 0.4, while the inflation rate in France is 0.7. The current exchange rate for the Euro is 1.4.

The inflation rate in the U.k. is 0.4, while the inflation rate in France is 0.7. The current exchange rate for the Euro is 1.4. Also, suppose the current real interest rate is 5 percent. After supply and demand for the Euro has adjusted in the manner suggested by purchasing power parity. What is the new exchange rate for the Euros? suppose the home currency is Euros.

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