The next year are 5 and 2 respectively. if relative, Ask an Expert

Economics

You are asked to consider factors that might influence the value of the US Dollar ($) in terms of the Japanese Yen (¥).

Assume that the current spot price of the dollar in terms of the yen is currently at ¥/$=79.5

Further assume that the expected rate of inflation in the US and Japan for the next year are 5% and 2% respectively. If relative purchasing power parity holds, what will be the spot price of the dollar in terms of yen one year from today?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M951241

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