What will be the new value of the canadian dollar

Reference no: EM131151464

Assume that the Canadian dollar's spot rate is $.85 and that the Canadian and US. inflationrates are similar.

Then assume that Canada experiences 4 percent inflation, while the UnitedStates experiences 3 percent inflation.

According to PPP, what will be the new value of the Canadian dollar after it adjusts to the inflationary changes?

Reference no: EM131151464

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