What should be the exchange rate at the end of the year

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Reference no: EM131543468

The exchange rate for euros at the beginning of a recent year was USD 1.16. During that year, inflation in the U.S. was 4.5% and inflation in the euro zone was 1%. If purchasing power parity (PPP) holds, what should be the exchange rate (in U.S. dollars) at the end of the year? Please show work.

Reference no: EM131543468

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