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From the base price level of 100 in 1979, Saudi Arabian and U.S. price levels in 2008 stood at 330 and 672, respectively. Assume the 1979 $/riyal exchange rate was $.78/riyal. Suggestion: Using purchasing power parity, adjust the exchange rate to compensate for inflation. That is, determine the relative rate of inflation between the United States and Saudi Arabia and multiply this times $/riyal of .78.
What should the exchange rate be in 2008? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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