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Currently, you can exchange 100 for $132.66. The inflation rate in Europe is expected to be 3.1 percent as compared to 3.6 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be 5 years from now?

a) 7298/$1

b) 7351/$1

c) 7367/$1

d) 7405/$1

e) 7423/$1

Any help in solving this relative purchasing power parity exercise is appreciated.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M9396947

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