Assuming that relative purchasing power parity exists

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Reference no: EM13935157

Currently, you can exchange 100 for $126.48. The inflation rate in Euroland is expected to be 2.8% as compared to 3.4% in the U.S. Assuming that relative purchasing power parity exists, the exchange rate 2 years from now should be: (Please explain the calculation.)

a. €1.2497/$1

b. €1.1414/$1

c. €0.7811/$1

d. €0.7903/$1

e. €0.7827/$1

Reference no: EM13935157

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