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Two countries, the United States and England, produce only one good, wheat. Suppose the price of wheat is $3.25 in the United States and is
Two countries, the United States and England, produce only one good, wheat. Suppose the price of wheat is $3.25 in the United States and is 1.35 in England. a.According to the law of one price, what should the USD/GBP spot exchange rate be? b.Suppose the price of wheat over the next year is expected to rise to $3.50 in the United States and to 1.60 in England. What should the one year USD/GBP forward rate be? c.If the U.S. government imposes a tariff of $0.50 per bushel on wheat imported from England, what is the maximum possible change in the spot exchange rate that could occur
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