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The spot exchange rate is 107 yen/$. US inflation is 6% per year for the next two years and Japan has inflation of 4% per

The spot exchange rate is 107 yen/$. US inflation is 6% per year for the next two years and Japan has inflation of 4% per year for the next two years. Two years from today the spot exchange rate is 104 yen/$. a. The US gained competitiveness b. The spot rate that preserves Relative PPP is 104.98 yen/$. c. US exports to Japan most likely increased. d. Japan gained competitiveness

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