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Suppose that on January 1, the yen price of the dollar is 120. Over the years, the Japanese inflation rate is 5 perecent, and the U.S inflation rate is 10 perecent. If the exchange rate is $1=Y130 at the end of the year, does the yen appear to be overvauled, undervalued, or at the PPP level? describe your answer.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M970533

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