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What will happen to the exchange rate

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Reference no: EM132396916

U.S. inflation rate: 1.2%; Mexican inflation rate: 4.5%

U.S. money growth rate: 2.2%; Mexican money growth rate: 6.4%

1. What will happen to the exchange rate between the U.S. dollar and the Mexican peso in the long run?

2. Calculate how much the Mexican peso will depreciate (or appreciate) against the U.S. dollar in the long run

Reference no: EM132396916

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