Suppose that EUR/USD is 1.6. Assume that CPI in Europe is expected to increase by 30% and CPI in the US is expected to increase by 50% in a year. What is the expected EUR/USD exchange rate in a year? Report your answer in 3-decimal precision. Ex: If your answer is 0.54634654674, then 0.546.

Suppose that EUR/USD is 1.6. Assume that CPI in Europe is expected to increase by 30% and CPI in the US is expected to increase by 50% in a year. What is the expected EUR/USD exchange rate in a year? Report your answer in 3-decimal precision. Ex: If your answer is 0.54634654674, then 0.546.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that EUR/USD is 1.6.
Assume that CPI in Europe is expected to increase by 30% and CPI in the US
is expected to increase by 50% in a year.
What is the expected EUR/USD exchange rate in a year?
Report your answer in 3-decimal precision.
Ex: If your answer is 0.54634654674, then 0.546.

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